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A Practical Guide To Making Better Decisions

Second Order Thinking

Your friends’ mother passes away.

You find out a week after it happens.

How would you respond?

First order thinking says, “Why didn’t you call me earlier!? Am I not your friend anymore?!”

Second order thinking says, “I’m proud of you for being so strong. I’m there for you. Whatever you need, let me know”.

A fat bully is chasing you.

You reach a staircase.

Do you go up or down?

First order thinking says, “Go down! You’re faster when going down-hill.”

Second order thinking says, “Go up! Going up is harder for you — but it’s much harder for the fat dude!”.

You’re about to make an investment.

You’re young and the market is crashing. Do you choose stocks, bonds, cash or a mix?

First order thinking says, “Save! All in Cash! Bonds at the worst. Stay away from stocks.”

Second order thinking says, “People are scared, and these stocks are a bargain now. They’re undervalued, and I’m young. I can absorb the risk. Let’s go all in to stocks.”