Tactics For Better Decision Making, And Skill Versus Luck

Audio Length: 00:57:47

Michael Mauboussin is a Managing Director and Head of Global Financial Strategies at Credit Suisse. He’s also a professor of finance at Columbia Business School, and the author of several books, such as; The Success Equation and More Than You Know.

Michael is widely recognized as a thought leader on the subject of decision-making, as well as thinking about things in the way of process over outcome, and skill vs luck.

And it’s these three things which are the over-arching theme of this episode. So hopefully, you’ll pick up a few good tips from Michael, that will help to improve your ability to make better decisions (and creating better processes) as a trader.

Topics of discussion:

How one can judge the quality of their decisions, three examples of cognitive limitations and common biases, and where Bayes’ Theorem can be applicable.

Is more information the key to better decisions—does it give a false sense of confidence or improve accuracy? And the concept of weighting information…

One simple technique to deal with indecisiveness, general exercises you can do to improve your decision-making ability, and how the brain creates narratives.

When it’s more important to focus on process over outcome, the important distinction between skill and luck, and three lessons from a legendary gambler.