One way of understanding the world or your future is thinking in probabilities. Sometimes you do it without knowing it. For example, you go for lunch and choose from different options. You choose the option that you think has the highest probability of being the best one. If you have a habit to make the choice, it is your unconscious mind that does the decision. You did the probabilistic thinking before you established the habit or someone else did it for you, for example, your parents. You live in an uncertain world. You can make better decisions in it by assigning probabilities for different outcomes, and deciding which outcome to aim for.
The quality of your thinking and luck defines the outcome of your decisions
You can divide the probabilistic thinking into two different categories: Certain and uncertain environments. In certain environments, you know the exact probabilities and the best wins. In an uncertain environment, the exact probabilities are unknown and the worse player can win. You can put games like lottery, professional chess, and many games in the casino, like roulette or slot machines into the first category. In the lottery, and in the other games in the casinos, you have fixed probabilities and professional chess is very close to it. In theory, you can always find the right next moves. In practice, you cannot find them when there are enough pieces left on the chessboard. Most of the time, the better player doesn´t lose in chess. And novice practically never wins the expert. Luck doesn´t have a role in the outcomes, casinos do not lose money in these games.
There are always hidden and incomplete information in uncertain environments. You cannot calculate precise probabilities. When you make decisions in these environments, the quality of your thinking and randomness define the outcomes. Some people call randomness luck. It is easy to believe that you made an excellent decision when you were lucky. In these environments, even the best decisions can have undesirable consequences. In the short run, the quality of your thinking matters less in the outcomes than randomness. In the long run, vice versa. Time is the enemy of the bad quality thinking and the friend of the good quality thinking. In these environments, you always have to think about the probability of being lucky.
Think about the probabilities of different outcomes
Thinking about the probabilities of different outcomes increase your probability of being right and making the best possible choice for further action. The simplest situations have only two different outcomes. For example, getting a job after a job interview has only two possible outcomes. You either get it or not. You can think about what is the probability of getting this job and make a decision about spending some time to apply for another job. If you think that the probability of getting a job is high, you can postpone the other application. If you have a low probability of getting that job, you should apply for another job as soon as possible. In reality, things are normally not that simple. You can have multiple outcomes. These multiple outcomes can have different outcomes which have different probabilities. These secondary outcomes can be more important than primary outcomes.
Thinking about the probability of understanding what you are doing
In an uncertain world, you have to live with hidden or incomplete information. You also have to think about the probability of having the right information and about the probability of understanding what the information you have means. These probabilities are never a hundred percent. Certainty doesn´t exist in these environments. You have to add this to your thinking. Depending on the sources, you have different probabilities of having the right information. Official statistics and academic research have a higher probability of being right than getting the information from sources that ”quote” them. Sometimes these people don´t offer possibilities to check the information. To be honest, I have done this sometimes by pure laziness. Be careful of what you read.
You can find ways to verify if the information you have is right. The bigger problems is that you can misunderstand or misinterpet the things you read or hear. Reading text with a foreign language increases the probability of misunderstanding. Your psychological tendencies are even worse enemies. You can read only texts that confirm your beliefs. And you can have many other psychological things that can move you into a wrong conclusion. As you can see, you have to consider many factors, when you make a decision. The more important the decision is, the more factors you need to worry about the probabilities of being right.
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Have a nice week!
-TT
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