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What Is a "Good" Decision? How Is Quality Judged?

June 05, 2015
Brian Egan


This paper provides an overview of how to judge the rigor of one's decision making. It describes how anyone can make better (higher quality) decisions, in any situation.


What is a good decision? How are decisions judged?

Most people, when asked, define good decisions as the ones that turned out well. But, must decisions be judged in hindsight-after the outcomes are apparent? Are we forced to wait until outcomes are apparent before knowing whether or not we made a good decision?

The short answer is no. Decisions do not need to be judged entirely in hindsight.

It is both possible and necessary to judge the quality of decisions before knowing the final outcomes. Excellent decision makers develop decisions that have a high probability of resulting in the desired outcomes. They judge quality in foresight and therefore have more happy endings.

Good decisions (in foresight) result in fewer surprises (in hindsight).

The quality of a decision (judged in foresight) is determined by the rigor that is applied to the problem being solved.

This paper provides an overview of how to judge the rigor of one's decision making. It describes how anyone can make better (higher quality) decisions, in any situation.

Decision Quality

Why are some decisions better than others? It depends on the quality and quantity of the information and reasoning being employed to arrive at the decision. Incorrect and/or incomplete information and reasoning lead to erroneous predictions of future outcomes and therefore to ill-informed decisions because of ill-informed expectations of what will happen as a result of a decision.

A decision is of high quality to the extent that the decision maker knows what risks they are taking by making that decision. They know how good or bad their information is and the biases inherent in their reasoning.

A good decision is one in which you know what you do not know.

Good Decisions

If a decision is made between options without a full understanding of the implications of one choice over another, but the outcome is good, was it a good decision?

No, it was just a "fortunate outcome." It was luck. Even bad decisions can have fortunate outcomes. Rigorously developed decisions (good decisions) have a higher probability of resulting in fortunate outcomes.

A bad decision is a quick, poorly informed choice. The decision maker chooses between options without understanding everything they need to know about the pros and cons of each option, or even whether all options have been considered. They do not know how good or bad their information is.

A high quality (good) decision is based on a methodical analysis of the available information and on sound reasoning.

The goodness of a decision (its quality) is a measure of how well informed the decision maker was when they chose between the options available to them.

A bad decision is one in which the decision maker was poorly informed, because of bad information, incomplete information, or faulty reasoning.

Good decisions do not depend on luck. They are not just the result of "throwing the dice"; they are examples of well-informed risk-taking.

Example Decision Part 1

You hear that an elderly family member, who lives alone, has sold their house and has invested all of their life savings into a mining venture. They invested all their money in is a gold mine in New Guinea. They heard about the gold mine in a randomly received email message.

Was this a good decision? How would you find out?

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