Investors: Protect Yourself from Mental Biases

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which in this case is not reliable. The optimization of processes with unreliable feedback is an extensive and different discussion.

In the end, confidence should not necessarily come from a belief in the certainty of outcomes, not even from previously good results. Real confidence should stem from a belief in the quality of the process, and a belief that the process will continue to improve. Don’t think of yourself as someone who is a “winner”, or is “right”. Rather make it part of your self-identification that you are a person who will do everything possible to achieve good outcomes, and who refuses to be fooled by randomness.

Conclusion

The road to hell is paved with good intentions. Accept that you are subject to biases like everybody else. Use tricks and tools to make yourself behave more rationally, instead of relying on your superior discipline.

Use the tools frequently, and train yourself to the point where resorting to them becomes the default reaction when facing difficult problems. Build your list of mental models and behavioral biases, and learn from your decision diary. As with everything, your tools will only be as good as you apply them. Accept the struggle with your own biases as a life-long battle.

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