--- name: decision-frameworks type: domain family: executive rigor: standard description: "Use when choosing between mutually exclusive strategic paths or building a repeatable decision process—constructs Decision Matrices with probability estimates and runs Pre-Mortems." keywords: "decision-making, uncertainty, mental-models, frameworks, analysis, probabilistic" compatibility: "Claude Code and compatible agent products" requires: [] enhances: ["strategy-clarity", "devils-advocate", "assumption-audit"] sources_pdf: ["Thinking in Bets (Duke)", "How to Decide (Duke)", "The Great Mental Models v1 (Parrish)", "The Great Mental Models v2 (Parrish)", "Poor Charlie's Almanack (Munger)", "Useful Not True (Sivers)"] sources_web: ["Farnam Street: Decision-making series", "Farnam Street: Mental Models"] --- ## Overview Decision frameworks provide the structural rigor to make high-quality choices under uncertainty. This skill transforms decision-making from an emotional "gut feel" into a probabilistic process by decoupling outcomes from process, identifying cognitive biases, and utilizing a latticework of mental models to uncover second-order consequences. ## Guiding Principles ### Principle 1: Decisions are Bets (Source: Duke, *Thinking in Bets*) Every decision is a bet on a specific future. Shift from binary "Right/Wrong" thinking to probabilistic "Confidence" thinking. Acknowledging uncertainty (e.g., "I am 70% confident") improves decision quality and reduces the sting of bad outcomes. ### Principle 2: Anti-Resulting (Source: Duke, *Thinking in Bets*) Do not judge a decision solely by its outcome. A "good" result can come from a "bad" process due to luck. Evaluate the *process* used at the time of the decision, not the final result. ### Principle 3: Latticework of Models (Source: Munger, *Poor Charlie's Almanack*) You cannot make wise decisions with a single mental model. You must have a "latticework" of models from multiple disciplines (math, physics, biology, psychology) to avoid the "Man with a Hammer" syndrome. ### Principle 4: Circle of Competence (Source: Parrish, *Great Mental Models v1*) Know the boundaries of your knowledge. Decisions made outside your circle of competence have a much higher risk of failure. If you must decide outside your circle, seek a partner with the missing expertise. ### Principle 5: Pragmatic Truth (Source: Sivers, *Useful Not True*) When faced with multiple interpretations of a situation, choose the one that is most *useful* for making progress, even if it is not "100% true." Belief is a tool for action. ## When to Use This Skill - When a decision involves significant "downside" risk or high uncertainty. - When choosing between mutually exclusive strategic paths. - When building a "Decision Journal" for organizational learning. - When an individual or team is stuck in "Analysis Paralysis." ## When NOT to Use This Skill - For low-stakes, reversible decisions (e.g., "Type 2" decisions). (Source: Bezos, Amazon Letter) - When speed is the primary requirement and the cost of being wrong is negligible. ## Core Process ### Step 1: Frame the Decision Clearly state the choice being made and the desired outcome. 1. **The Happiness Test:** Will this decision matter in 10 minutes? 10 months? 10 years? Use the result to determine how much time to spend on the decision. (Source: Duke, *How to Decide*) 2. **First Principles:** Strip away the analogies and conventional wisdom. What are the fundamental truths of this situation? (Source: Parrish, v1) ### Step 2: Build the Decision Matrix Map the possibilities and probabilities. (Source: Duke, *How to Decide*) 1. **Options:** List all possible paths (including "Do Nothing"). 2. **Outcomes:** For each path, list the possible results (Best, Worst, Average). 3. **Probabilities:** Assign a percentage chance to each outcome. ### Step 3: Apply Mental Model Stress-Tests Use the latticework to uncover hidden flaws. (Source: Munger, Parrish) 1. **Inversion:** What would cause this decision to be a disaster? How do we avoid that? 2. **Second-Order Thinking:** Ask "And then what?" for the preferred outcome. What are the long-term consequences? 3. **Occam's Razor:** If there are two competing solutions, is the simpler one more likely to be correct? (Source: FS Blog) ### Step 4: Perform a Pre-Mortem Imagine the decision has failed 12 months from now. (Source: Duke, *How to Decide*) 1. **Identify the Cause:** Why did it fail? (e.g., market shift, execution gap, technical debt). 2. **Mitigate:** Adjust the current plan to prevent those identified failure modes. ### Step 5: Document in the Decision Journal Record the reasoning *at the time* to prevent hindsight bias. (Source: Duke, *Thinking in Bets*) 1. **The Context:** What did we know at the time? 2. **The Reasoning:** Why did we choose this path? 3. **The Confidence:** What was our percentage confidence in the result? ## Frameworks & Models ### The Decision Matrix (Source: Duke, *How to Decide*) A structured table mapping: - Option A vs. Option B. - Probabilities of Success/Failure. - Expected Value (Value * Probability). ### Hanlon's Razor (Source: FS Blog) "Never attribute to malice that which is adequately explained by stupidity (or incompetence)." Use this to prevent emotional bias in interpersonal or competitive decisions. ### Map vs. Territory (Source: Parrish, *Great Mental Models v1*) The model (the map) is not the reality (the territory). Always check if the "map" you are using for a decision matches the actual "territory" on the ground. ## Cross-Skill Invocations - **REQUIRED SUB-SKILL:** `devils-advocate` — To stress-test the preferred option in the matrix. - **RECOMMENDED SUB-SKILL:** `assumption-audit` — To validate the probabilities assigned in Step 2. - **RECOMMENDED SUB-SKILL:** `mental-model-library` — For a broader set of models beyond the core three. ## Common Mistakes 1. **Resulting:** Judging a decision based on its outcome rather than the process. (Source: Duke, Ch. 1) 2. **Analysis Paralysis:** Spending more time on a decision than the "Happiness Test" justifies. (Source: Duke, Ch. 5) 3. **Overconfidence:** Stating 100% certainty in an uncertain future. (Source: Duke, Ch. 2) 4. **Hindsight Bias:** Believing you "knew it all along" after the result is known. (Source: Duke, Ch. 6) ## Diagnostic Checklist - [ ] Have we decoupled the outcome from the decision process? - [ ] Have we assigned probabilistic confidence scores (e.g., 60%, 80%) to our claims? - [ ] Have we performed an "Inversion" or "Pre-Mortem" to identify failure paths? - [ ] Is this decision within our "Circle of Competence"? - [ ] Have we considered second-order consequences ("And then what?")? ## Sources - Duke, *Thinking in Bets*, Ch. 1, 2, 6 — Resulting, Confidence, Decision Journal. - Duke, *How to Decide*, Ch. 3, 4, 5 — Decision Matrix, Pre-Mortem, Happiness Test. - Parrish, *Great Mental Models v1*, Ch. 1, 2, 4 — First Principles, Circle of Competence, Second-Order Thinking. - Munger, *Poor Charlie's Almanack*, Ch. 2 — Latticework, Inversion. - Sivers, *Useful Not True* — Pragmatic belief as a decision tool.