Decision Intelligence — 6-Model Framework
Core principle: Every decision is a probability problem. Apply six models in sequence to correct predictable failures of intuition.
MANDATORY: Apply all 6 models to every input. Never skip. If a model seems less relevant, apply it anyway — that judgment is often where the bias hides.
Step 0: Clarify the Core Question
Restate the decision in one sentence: *"The real question is: [single clear question]."* Sharpen if fuzzy.
Step 1 — Expected Value (EV)
Mechanic: EV = Σ (probability × payoff)
Process:
- List all meaningful outcomes (not just best/worst — include most likely)
- Assign probabilities summing to 100%
- Estimate payoff per outcome (financial, time, opportunity, emotional — units explicit)
- Calculate EV = Σ (p × payoff)
- Flag if loss aversion is inflating perceived cost of negatives
Output:
| Outcome | Probability | Payoff | EV contribution |
|---|---|---|---|
| [A] | X% | +€Y | +€Z |
| [B] | X% | -€Y | -€Z |
| Total EV | 100% | €[sum] |
Bias: Loss aversion — losses feel ~2× gains. Positive EV + hesitation = loss aversion likely.
Step 2 — Base Rate Neglect
Mechanic: Anchor on the historical rate for this category before adjusting for specifics.
Process:
- Identify the reference class
- Find/estimate the base rate for success/failure
- Only then apply specific adjustments
- Flag if user is reasoning from vivid anecdotes rather than rates
Common base rates:
- Startups reaching profitability: ~10–20%
- New restaurants surviving year 1: ~40% (year 5: ~20%)
- New products achieving PMF: ~5–15%
- Day traders beating market consistently: ~1–5%
- New habits maintained 6 months: ~20%
- Projects on time + budget: ~30–35%
Bias: Availability — we hear successes; the silent majority of failures is invisible.
Step 3 — Sunk Cost Fallacy
Mechanic: Ignore everything already spent. Evaluate as if starting today.
Process:
- Identify all sunk costs (money, time, emotion, public statements)
- Set them to zero
- Re-evaluate using only future costs/benefits/probabilities
- If the answer changes when zeroed → fallacy is active
Diagnostic: *"If I had not already invested [X], would I start this today?"*
- Yes → proceed for the right reasons
- No → sunk cost is the only reason to continue
Bias: Escalation of commitment — the more invested, the harder to walk away.
Step 4 — Bayesian Thinking
Mechanic: Update beliefs proportionally to evidence strength.
P(belief | evidence) = P(evidence | belief) × P(belief) / P(evidence)- Prior: belief before evidence
- Likelihood: P(evidence | true) vs P(evidence | false)
- Posterior: belief after evidence
Process:
- State prior as a probability, not impression
- Identify the new evidence
- Estimate likelihood ratio (true vs. false)
- Update proportionally — never to 0%/100%, never ignore the prior
- State posterior
Bias: Overreaction to single data points — a single anecdote rarely shifts a prior more than a few points unless highly diagnostic.
Step 5 — Survivorship Bias
Mechanic: When seeing successes, estimate the invisible denominator.
Process:
- Count visible successes
- Estimate hidden total: *"How many tried this? How many am I not hearing from?"*
- Implied success rate = visible / total attempts
- Check consistency with Step 2 base rate
Diagnostic: *"What would I need to see to hear about the failures? Why don't I?"*
Bias: Narrative — successes have arcs and lessons; failures are quiet and diffuse.
Step 6 — Kelly Criterion
Mechanic: When you have an edge, size the bet for long-term growth without ruin.
f* = (p × b - q) / bf*= fraction of capital to betp= win probabilityq= lose probability (1 − p)b= net odds (win per unit risked)
Use fractional Kelly (¼ to ½ f*) for real decisions. Half-Kelly gives ~75% of the growth with much less volatility.
Process:
- Estimate p from Steps 1–5
- Estimate b
- Calculate f*
- Recommend ½f* (moderate confidence) or ¼f* (high uncertainty)
- If f* ≤ 0: no edge — do not bet
- If f* > 1: extreme edge — recheck probabilities
Bias: Overbetting — humans size positions too large for their actual edge, especially after wins.
Final: Synthesized Recommendation
DECISION INTELLIGENCE SYNTHESIS
Core question: [from Step 0]
Model verdicts:
- EV: [positive/negative/marginal, key number]
- Base rate: [X% success for this category]
- Sunk cost: [active / not — does decision change when zeroed?]
- Bayesian update: [prior → evidence → posterior]
- Survivorship bias: [true rate vs. observed stories]
- Kelly sizing: [f* = X%, allocation = Y%]
Primary bias in play: [the one most distorting this decision]
Recommendation: [clear action]
Confidence: [0–100%]
Key risks: [top 2–3]
What would change this view: [specific evidence]If math contradicts intuition, say so. Discomfort with the conclusion often signals the analysis is working.
Relationship to Other Skills
- Run before
decision-synthesiswhen stakes are quantifiable — provides probabilistic inputs to weigh - Complements
probabilistic-thinking(Bayesian depth) andcognitive-bias-detection(broad audit) — this skill applies both to decision sizing and commitment - When
scenario-planningproduces multiple futures, run this skill on the decision within each fermi-estimationfeeds Step 1 (EV) and Step 2 (base rates) when numbers aren't ready