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“I made a mistake”

Business

This sits right next to, “I made a bad decision,” in things that are hard to say. But there are many moments when we’re confused about what actually happened.

You might not have made a bad decision. And it’s also possible you didn’t make a mistake.

It could be that there was simply a bad outcome.

That’s different.

Annie Duke opened my eyes to the distinction, and it’s critically important.

Good decisions are calculations based on what you know right now. If the world turns out differently than the data you had indicated, that’s not a bad decision.

A bad decision is one that isn’t based on available facts. It falls into traps like sunk costs or peer pressure. A bad decision is an error in judgment or skill. Good decision makers, when faced with the same options as you had, would not have done what you did.

But good decisions often can lead to undesired outcomes.

Taking the 8:20 train is a good decision, and if the train breaks down and you’re late, it was still a good decision.

Buying a lottery ticket is never a good decision. Sometimes you win, that’s great, but given the data you had when you bought the ticket, there are clearly more profitable ways to invest your money.

If you start a business and unlikely events cause that business to fail, it’s not at all clear that you made a mistake (or a bad decision). What is clear is that the business failed, and you are involved in cleaning up a bad outcome.

The words matter. Because we should repeat our good decisions and avoid our avoidable errors.

Outcomes happen, every time. But we’re only able to be smart about what we know (including the odds), not about what is about to happen.

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