AI-Assisted D ecision-making
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Chain of Thought
How to use ChatGPT to master the best of what other people have figured out
by Dan Shipper
October 6, 2023
39
1
Listen
Sponsored By: Glean
This essay is brought to you by Glean , the AI-powered search for your work. Imagine having Google and ChatGPT, equipped and optimized for your workplace, at your fingertips, that is the power of Glean.
Explore demo
Want to sponsor Every? Click Here.
Years ago, Federal Express couldnât deliver packages on time.
All packages were moved between airplanes at one central airport every night. The only problem was that the night shift wasnât moving fast enough to get the job doneâdelays were common and customers were irate.
Theyâd tried everything they could to improve efficiency to no avail. Until they tried something new: they stopped paying by the hour. Instead, as soon as the night shift workers had completed the task of moving packages, they were allowed to go home with full pay.
Suddenly, packages were going out on time every night.
This story exemplifies one of investor Charlie Mungerâs most famous adages: âNever, ever, think about something else when you should be thinking about the power of incentives.â
These sorts of Mungerisms are like catnip for business nerds. If you read through his speech, â The Psychology of Human Misjudgment ,â youâll find all sorts of heuristics and mental models like this. Itâs dense with them. Listening to (or reading) it, you get the sense that if you could just imbibe itâreally inscribe it in your brainâyouâd make such good decisions you could do anything in the world.
Unfortunately, thatâs hard.
Over the last 10 years thereâs been an explosion in the use of mental models and heuristics by entrepreneurs. Andrew Wilkinson, the CEO of Tinyâa $400 million market cap public holding company of technology businessesâ listened to Charlie Mungerâs speech over and over again on his way to work for a year.
Everyone wants to learn the latest behavioral economics trick, psychological insight, or lesson from science or philosophy that can help them make decisions.
The problem is: we canât remember to apply them. We make lists in Notion of our principles and use Anki to note down mental models. But they end up being mostly abandoned.
ChatGPT changes this. It allows you to bring to bear the best of what other people have figured out every time you make a decision. Every heuristic or mental model you could ask for is already in its digital brain. All you have to do is remember to use it when youâre making decisions.
I know because Iâve been using it. In order to show you how this works, Iâm going to use ChatGPT to help the characters in a decisive moment in the movie The Big Short make better decisions. Then Iâll show you how to deploy it in your own life.
Ever felt overwhelmed trying to find information spread across numerous apps? Let Glean do the heavy lifting for you. It's an AI-powered search engine made for the workplace. Picture a fusion of Google and ChatGPT, specifically designed for your business's needs. With Glean , you gain access to intelligent, instantly responsive search features and a business-grade AI chatbot that swiftly navigates your company's knowledge base. Step into a new world of easy and secure information discovery with Glean.
Explore demo
Want to sponsor Every? Click Here.
Selling shorts to Michael Burry
In The Big Short (which is based on the true story of the traders who profited from the 2008 financial crisis) , investor Michael Burry has a meeting at Goldman Sachs. He wants to short the housing market and has decided to bet $100 million.
This looks like a good trade for the Goldman Sachs bankers. In order for this trade to lose money, millions of Americans would have to fail to pay their mortgages. This has never happened. There is no chance Burry is right. The bankers see dollar signs.
They take the trade. They laugh as he leaves their office:
We know how this ends: Burryâs right, and the bankers are just blind.
Homebuyers, enticed by the prospect of cheap loans and the American dream, have been buying homes they canât afford. Lenders, enticed by short-term profits, have been bending the rules of who is allowed to get a mortgage and originating loans to subprime homebuyers. Banks have been buying these mortgages, bundling them into securities, and selling them to investors. Bank employees are being rewarded with bonuses for the amount of securities they can sell, not their long-term performance. Credit rating agencies that are paid big bucks to sanction these securities look the other way, labeling them safe even though they contain loans that will likely blow up. The government and the media pump home ownership as the most important signal of success, and the cycle continues.
How can you help the Goldman Sachs bankers in this scene make a better decision? Letâs assume theyâre smart enough to double-check their mental models before they sign away the keys to the kingdom.
Creating the psychological context for the players
The first thing youâll want to do is have ChatGPT break down the psychology of the players in the situation. So all you have to do is ask:
ChatGPT comes back with something pretty great. First it outlines Burryâs biography up to 2006:
In my experience, if you provide ChatGPT with a detailed set of observations about a person in your life, even if they arenât famous, it will come up with a psychological profile that feels accurate. For example, I recently met a founder who was in the middle of fundraising for their company and looking for me to angel invest. I fed my observations into ChatGPT to help me clarify my thinking:
Once youâve laid out the psychological profile of the key players in your decision, itâs time to ask ChatGPT to analyze the situation.
Analyzing the situation
We stan Mungerâs list of mental models, and our Goldman Sachs scene is a perfect place to deploy them. All we have to do is set the context for ChatGPT and ask it to analyze using Mungerâs speech:
ChatGPT uses Mungerâs list of misjudgments to help the hapless Sachsians analyze Burry. For example, it points out how incentives and confirmation bias might lead us to dismiss Burry as a quack without digging deeper.
If we ask it to analyze which misjudgment is most relevant given our knowledge of Burryâs strengths and weaknesses, hereâs what it says:
It picks up on the reason to believe Burry: he has a track record of analytical skill from long before The Big Short days. It also detects why we might be hesitant to do that: his awkward demeanor makes it easy to dismiss him.
If the bankers in this scene had consulted ChatGPT, they might have been motivated to double-check their assumptionsâand avoid such a bad trade.
How to use AI in decision-making in your life
Using ChatGPT to analyze movie scenes may seem like a contrived example.
But in my experience, itâs actually quite good at analyzing situations by breaking down the motivations of key players and applying heuristics to help you unravel them. This is because GPT-4 has human-level theory of mind âthe ability to ascribe mental states to peopleâand it knows about all of the heuristics and mental models you might need in order to make good decisions.
If you want to apply this in your life, here are a few steps to get started:
Use ChatGPT to break down decisions big and small
Next time youâre facing a decision, talk to ChatGPT about it. Just provide it with as much context as you can, and ask it to help you break down the situation.
Use heuristics and mental models to deepen the analysis
Make sure to bring in your favorite thinkers to help enrich your discussion. You can use Munger, Daniel Khanemanâs book Thinking Fast and Slow , Shane Parrishâs Farnam Street, or others.
Save things that work in Custom Instructions
In the process of doing this, youâll likely come up with mental models or heuristics that are particularly important for you. For example, Iâve identified that Iâm a little bit too agreeable in interpersonal situations . I think this is likely driven by fear of feeling guilty about letting people down. Iâve found that asking myself the question, âWhat would I do if I wasnât afraid of feeling guilty?â is a useful heuristic for understanding the situation from a less subjective angle. Ideally, once Iâve identified this, Iâd like ChatGPT to remind me of it. This is what Custom Instructions are for.
Custom Instructions allows you to tell ChatGPT how you want it to respond to your queries. In my Custom Instructions, I tell ChatGPT: âIf I'm in a complex interpersonal situation, ask, âWhat would I do if I wasn't afraid of feeling guilty?â"
Now, whenever I ask ChatGPT for advice about situations involving other people, it starts by asking me what I would do if I weren't afraid of feeling guilty. Iâve found this helps me clarify things in my own mind and make better decisions as a result.
If you play around with ChatGPT enough, youâll probably find clarifying questions or heuristics that are equally helpful for you.
So if youâre looking to make better decisions and want to learn how to incorporate more heuristics and mental models into your life, use ChatGPT. Itâll make a difference.
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Georgia Patrick
about 1 hour ago
Dan.... it would be much better if it was real. Start with a big decision you are struggling with, there at Every. Then show how ChatGPT gets you to a better decision. I don't know The Big Short and what does that have to do with what you are trying to do with your life? You started out great and then this felt like 30,000 feet off topic.
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Subscribe. About. Collections. Contact Us. Sponsor Us. Login. Chain of Thought. How to use ChatGPT to master the best of what other people have figured out. by Dan Shipper. October 6, 2023. 39. 1. Listen. Sponsored By: Glean. This essay is brought to you by Glean , the AI-powered search for your work. Imagine having Google and ChatGPT, equipped and optimized for your workplace, at your fingertips, that is the power of Glean. Explore demo. Want to sponsor Every? Click Here. Years ago, Federal Express couldnât deliver packages on time. All packages were moved between airplanes at one central airport every night. The only problem was that the night shift wasnât moving fast enough to get the job doneâdelays were common and customers were irate. Theyâd tried everything they could to improve efficiency to no avail. Until they tried something new: they stopped paying by the hour. Instead, as soon as the night shift workers had completed the task of moving packages, they were allowed to go home with full pay. Suddenly, packages were going out on time every night. This story exemplifies one of investor Charlie Mungerâs most famous adages: âNever, ever, think about something else when you should be thinking about the power of incentives.â These sorts of Mungerisms are like catnip for business nerds. If you read through his speech, â The Psychology of Human Misjudgment ,â youâll find all sorts of heuristics and mental models like this. Itâs dense with them. Listening to (or reading) it, you get the sense that if you could just imbibe itâreally inscribe it in your brainâyouâd make such good decisions you could do anything in the world. Unfortunately, thatâs hard. Over the last 10 years thereâs been an explosion in the use of mental models and heuristics by entrepreneurs. Andrew Wilkinson, the CEO of Tinyâa $400 million market cap public holding company of technology businessesâ listened to Charlie Mungerâs speech over and over again on his way to work for a year. Everyone wants to learn the latest behavioral economics trick, psychological insight, or lesson from science or philosophy that can help them make decisions. The problem is: we canât remember to apply them. We make lists in Notion of our principles and use Anki to note down mental models. But they end up being mostly abandoned. ChatGPT changes this. It allows you to bring to bear the best of what other people have figured out every time you make a decision. Every heuristic or mental model you could ask for is already in its digital brain. All you have to do is remember to use it when youâre making decisions. I know because Iâve been using it. In order to show you how this works, Iâm going to use ChatGPT to help the characters in a decisive moment in the movie The Big Short make better decisions. Then Iâll show you how to deploy it in your own life. Ever felt overwhelmed trying to find information spread across numerous apps? Let Glean do the heavy lifting for you. It's an AI-powered search engine made for the workplace. Picture a fusion of Google and ChatGPT, specifically designed for your business's needs. With Glean , you gain access to intelligent, instantly responsive search features and a business-grade AI chatbot that swiftly navigates your company's knowledge base. Step into a new world of easy and secure information discovery with Glean. Explore demo. Want to sponsor Every? Click Here. Selling shorts to Michael Burry. In The Big Short (which is based on the true story of the traders who profited from the 2008 financial crisis) , investor Michael Burry has a meeting at Goldman Sachs. He wants to short the housing market and has decided to bet $100 million. This looks like a good trade for the Goldman Sachs bankers. In order for this trade to lose money, millions of Americans would have to fail to pay their mortgages. This has never happened. There is no chance Burry is right. The bankers see dollar signs. They take the trade. They laugh as he leaves their office: We know how this ends: Burryâs right, and the bankers are just blind. Homebuyers, enticed by the prospect of cheap loans and the American dream, have been buying homes they canât afford. Lenders, enticed by short-term profits, have been bending the rules of who is allowed to get a mortgage and originating loans to subprime homebuyers. Banks have been buying these mortgages, bundling them into securities, and selling them to investors. Bank employees are being rewarded with bonuses for the amount of securities they can sell, not their long-term performance. Credit rating agencies that are paid big bucks to sanction these securities look the other way, labeling them safe even though they contain loans that will likely blow up. The government and the media pump home ownership as the most important signal of success, and the cycle continues. How can you help the Goldman Sachs bankers in this scene make a better decision? Letâs assume theyâre smart enough to double-check their mental models before they sign away the keys to the kingdom. Creating the psychological context for the players. The first thing youâll want to do is have ChatGPT break down the psychology of the players in the situation. So all you have to do is ask: ChatGPT comes back with something pretty great. First it outlines Burryâs biography up to 2006: In my experience, if you provide ChatGPT with a detailed set of observations about a person in your life, even if they arenât famous, it will come up with a psychological profile that feels accurate. For example, I recently met a founder who was in the middle of fundraising for their company and looking for me to angel invest. I fed my observations into ChatGPT to help me clarify my thinking: Once youâve laid out the psychological profile of the key players in your decision, itâs time to ask ChatGPT to analyze the situation. Analyzing the situation. We stan Mungerâs list of mental models, and our Goldman Sachs scene is a perfect place to deploy them. All we have to do is set the context for ChatGPT and ask it to analyze using Mungerâs speech: ChatGPT uses Mungerâs list of misjudgments to help the hapless Sachsians analyze Burry. For example, it points out how incentives and confirmation bias might lead us to dismiss Burry as a quack without digging deeper. If we ask it to analyze which misjudgment is most relevant given our knowledge of Burryâs strengths and weaknesses, hereâs what it says: It picks up on the reason to believe Burry: he has a track record of analytical skill from long before The Big Short days. It also detects why we might be hesitant to do that: his awkward demeanor makes it easy to dismiss him. If the bankers in this scene had consulted ChatGPT, they might have been motivated to double-check their assumptionsâand avoid such a bad trade. How to use AI in decision-making in your life. Using ChatGPT to analyze movie scenes may seem like a contrived example. But in my experience, itâs actually quite good at analyzing situations by breaking down the motivations of key players and applying heuristics to help you unravel them. This is because GPT-4 has human-level theory of mind âthe ability to ascribe mental states to peopleâand it knows about all of the heuristics and mental models you might need in order to make good decisions. If you want to apply this in your life, here are a few steps to get started: Use ChatGPT to break down decisions big and small. Next time youâre facing a decision, talk to ChatGPT about it. Just provide it with as much context as you can, and ask it to help you break down the situation. Use heuristics and mental models to deepen the analysis. Make sure to bring in your favorite thinkers to help enrich your discussion. You can use Munger, Daniel Khanemanâs book Thinking Fast and Slow , Shane Parrishâs Farnam Street, or others. Save things that work in Custom Instructions. In the process of doing this, youâll likely come up with mental models or heuristics that are particularly important for you. For example, Iâve identified that Iâm a little bit too agreeable in interpersonal situations . I think this is likely driven by fear of feeling guilty about letting people down. Iâve found that asking myself the question, âWhat would I do if I wasnât afraid of feeling guilty?â is a useful heuristic for understanding the situation from a less subjective angle. Ideally, once Iâve identified this, Iâd like ChatGPT to remind me of it. This is what Custom Instructions are for. Custom Instructions allows you to tell ChatGPT how you want it to respond to your queries. In my Custom Instructions, I tell ChatGPT: âIf I'm in a complex interpersonal situation, ask, âWhat would I do if I wasn't afraid of feeling guilty?â" Now, whenever I ask ChatGPT for advice about situations involving other people, it starts by asking me what I would do if I weren't afraid of feeling guilty. Iâve found this helps me clarify things in my own mind and make better decisions as a result. If you play around with ChatGPT enough, youâll probably find clarifying questions or heuristics that are equally helpful for you. So if youâre looking to make better decisions and want to learn how to incorporate more heuristics and mental models into your life, use ChatGPT. Itâll make a difference. What did you think of this post? Amazing. Good. Meh. Bad. Like this? Become a subscriber. Subscribe â. Or, learn more . Thanks to our Sponsor: Glean. Imagine you could google all your business data - a search engine that can quickly find anything you need from across your entire companyâs knowledge base. That is Glean , an AI-driven search tool with a touch of ChatGPT magic but actually built for real work. You'll experience swift, intelligent search capabilities and an advanced AI chat that scours your enterprise data safely and thoroughly. Save your time for what truly matters with Glean. Explore Demo. Want to sponsor Every? Click Here. Comments. login. Sign up! Georgia Patrick. about 1 hour ago. Dan.... it would be much better if it was real. Start with a big decision you are struggling with, there at Every. Then show how ChatGPT gets you to a better decision. I don't know The Big Short and what does that have to do with what you are trying to do with your life? You started out great and then this felt like 30,000 feet off topic. ⥠0. Reply. Understand AI. Get one actionable essay a day on AI, tech, and personal development. Subscribe. Already a subscriber? Login. Contact Us · Sponsor Us · Search · Terms. ©2023 Every Media, Inc.