#188: Calculated Risks, Imitate-the-Successful-Heuristic & Long-Term Success
3 Ideas in 2 Minutes on Risky Heuristics
I. Calculated Risks
When facing a risk, it’s worthwhile to ask if we can calculate it:
It’s important to distinguish between a world where you can calculate the risks and other situations where you can’t do that. So, if you can calculate the risk, that would be the case if you played a roulette or a lottery, where all probabilities are known, where all possible outcomes are known, and all consequences are known. Then: better calculate.
But in many situations of the world, there is uncertainty, where you cannot know the probability, not even estimate them. And also, moreover, you can’t know all the possible future states of the world. So, if you want to invest, if you want to find out whom to marry, if you decide what professor to hire, these are all situations of uncertainty, and precise calculations are an illusion in this situation.
What’s useful are heuristics that are robust — so, rules of thumb that have a good chance to hit as opposed to a calculation that over-fits the past.
II. Imitate-the-Successful-Heuristic
One of the most common mental shortcuts is probably the Imitate-the-Successful-Heuristic. That’s when we look up to and copy the best in any given domain; their decisions, preferences or mindsets. When we see someone who’s made it, we often think that by emulating their behaviour, we’ll reach the same level of success.
And it’s true. A budding manager who wants to learn the art of negotiation would look at what the most successful business people do and adopt their strategies. However, the secret lies in choosing, without much effort, which strategies to study. Beware of starting a Cargo Cult by imitating a few behaviours while ignoring their context and hoping to get results.
Even though many successful people in tech swear by it, waking up early and mindfully dissolving green powder in filtered water is not the key to success and productivity. Everyone knows that to make your first million, you also need to start BJJ and wear the same clothes every day.
III. Long-Term Success
There’s a similar (perhaps less obvious) caveat to following this particular heuristic. Author Luca Dell’Anna explains its importance for long-term success:
You shouldn’t imitate all successful people, only those who succeeded using good strategies — strategies that can reliably bring success to those using them.
I often use the example of casino croupiers. They are the only people at the gambling tables with a moneymaking strategy, yet every day, they see at least one player get richer than them.
However, they must remind themselves that abandoning their job to become gamblers would be an error: they would make much less money.
If you must choose whose strategy to imitate, copy the croupiers, not the lucky players.
—Luca Dell'Anna, Winning Long-Term Games
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Have a great week,
Chris
themindcollection.com