Decision Quality Evaluation Framework

The investor who evaluates decisions by their outcomes will repeat lucky errors and abandon sound processes after bad luck. The investor who evaluates decisions by their quality will compound their skill regardless of short-term results.

Why This Matters

Kahneman's core insight about decision-making is that outcome quality and decision quality are different things. A good process applied to genuine uncertainty will produce bad outcomes some percentage of the time — that is not a failure of the process, it is a feature of uncertainty. Improving as an investor requires separating the two: evaluating decisions by whether the process was sound, not by whether the outcome was favourable. This framework structures that separation.