Page 229 - Ray Dalio - Principles

1. Remember that multiple levels exist for all subjects.

2. Be aware on what level you’re examining a given subject.

3. Consciously navigate levels rather than see subjects as
undifferentiated piles of facts that can be browsed
randomly.

4. Diagram the flow of your thought processes using the
outline template shown on the previous page.

When you do all this with radical open-mindedness, you
will become more aware not just of what you’re seeing, but
what you’re not seeing and what others, perhaps, are. It’s a
little like when jazz musicians jam; knowing what level you’re

on allows everyone to play in the same key. When you know
your own way of seeing and are open to others’ ways too, you
can create good conceptual jazz together rather than just
screech at each other. Now let’s go up a level and examine
deciding.

DECIDE WELL

Using decision-making logic to produce the best long-term
outcomes has become its own science—one that employs

probabilities and statistics, game theory, and other tools. While
many of these tools are helpful, the fundamentals of effective
decision making are relatively simple and timeless—in fact
they are genetically encoded in our brains to varying degrees.
Watch animals in the wild and you’ll see that they instinctively
make expected value calculations to optimize the energy they
expend to find food. Those that did this well prospered and
passed on their genes through the process of natural selection;

those that did it poorly perished. While most humans who do
this badly won’t perish, they will certainly be penalized by the
process of economic selection.

As previously explained, there are two broad approaches to
decision making: evidence/logic-based (which comes from the
higher- level brain) and subconscious/emotion-based (which

comes from the lower-level animal brain).