Top Highlights

• The key to statistical prediction is to figure out how much weight you should assign to the base rate and specific case. If the expected accuracy of the prediction is low, you should place most of the weight on the base rate. If the expected accuracy is high, you can rely more on the specific case.
• Just because someone wins at roulette, it doesn't help you to guess where the ball will end up on the next spin. Unfortunately, we don't usually think this way. When we make predictions, we often fail to recognize the existence of luck, and as a consequence we dwell too much on the specific evidence, especially recent evidence. This also makes it t...
• Knowing what you can know and knowing what you can't know are both essential ingredients of deciding well. Not everything that matters can be measured, and not everything that can be measured matters.
• “It is gratifying to rationalize that we would rather lose intelligently than win ignorantly.”8 Luck may or may not smile on us, but if we stick to a good process for making decisions, then we can learn to accept the outcomes of our decisions with equanimity.
• Luck is a chance occurrence that affects a person or a group (e.g., a sports team or a company). Luck can be good or bad. Furthermore, if it is reasonable to assume that another outcome was possible, then a certain amount of luck is involved.