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Psychology

Decision Quality

The soundness of a decision evaluated against the information available at the time it was made, before the outcome was known. The Architect's only unit of judgment. A plan-followed loss is a high-quality decision with bad variance; an unplanned YOLO that printed is a low-quality decision with good luck.

See also
Psychology Resulting Annie Duke's term (Thinking in Bets, 2018) for the error of judging decision quality by outcome quality. A bad decision that produced a good outcome is still a bad decision. A good decision that produced a bad outcome is still a good decision. The most expensive wins in trading teach the wrong lesson. → Psychology Outcome Bias The documented cognitive bias of rating identical decisions more favorably when told the outcome was good, even when explicitly stating that outcomes should not affect evaluation (Baron and Hershey, 1988). Automatic, self-deceptive, and confirmed by a 2023 pre-registered replication with an even larger effect size. → Psychology Plan-Followed vs Plan-Broken The journaling distinction between trades where the pre-committed plan was executed and trades where it was deviated from. Expectancy must be calculated separately for each. If plan-broken expectancy matches or beats plan-followed, the written plan is not a plan — it is a written suggestion. →
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