[[Probabilistic Thinking]] [[Deciding]] tags:: #on/decisions dates:: 2022-02-26 people:: Bayes, # Probabilistic thinking *I do not come naturally but can help you overcome many cognitive traps and biases.* Three major types of probabilistic thinking: - Bayesian Thinking: Taking all previous knowledge into account when you acquire new knowledge, or, base probability impacts likelihood of new probability - Fat tails: normal distributions with bounded tails versus fat tails, the likelihood of a 1:1,000 year event on any given year may be actually pretty high in fat tail conditions - Exponential effects: the difference between exponential effects and distributed effects is outsized compared to how our brain processes them This reminds me of thinking about how to manage uncertainty in medicine, and in life. It's kind of like Occums Razor, Hanlons Razor, and Hickum's Dictum. All are ways of looking at a situation that cause us to consider the probabilities, but not be constrained by them. It allows us to account for more information, and not fall victim to [[In sight in mind]], recency bias, or other [[Deciding]] or bias such as those from [[Thinking Fast and Slow]]. This is a way of taking our Type I and Type II decision making, and applying some mind-expanding concepts to them, so we place the right value on the different possibilities. The opposite idea is that in a complex world we should go with our gut. Our gut answer is the right answer in many circumstances, and we don't make decisions perfectly anyways, so we really can't make perfect decisions by applying probabilistic thinking to complex situations. We can barely account for [[First Principles Thinking]] let alone recognize the second order effects at play as we make decisions. ## Sources: [[The Great Mental Models Volume 1]]