Decision Making Models

Expected Utility Calculation

Looking at the expected value of all possible choices weighted with the predicted outcome of their probably. Core in calculating strategy in poker using card probabilities + pot odds.

Zone of Indifference Problem

Decisions between options with a high variance in quality is easy. Decisions get harder as the options get closer, but if they are close enough then the decision doesn't matter. This is called the zone of indifference. Can be solved with "random beats inaction"

Random beats inaction

If a set of choices has a low range of variance, are easily reversible, or aren't worth the expenditure of trying to solve them, the best action may be to decide randomly, via coin or d20.

A parable: There's a donkey in the desert, halfway between water and food. It wants both equally and dies due to indecision. If the donkey were nudged at random in one direction or the other, it would have moved towards one, and then the other.

Null Hypothesis

Asking for a decision "what if we do nothing?" for a given option. Sometimes the winning move is not to play.

Make Reversible Decisions Quickly

"Some decisions are one-way doors, make those decisions slowly. But most are changeable and reversible. They should be made quickly by high judgement individuals in small groups" - Jeff Bezos