Unknown Unknowns Hindsight

Hindsight is the wisest philosopher, unequivocal macroeconomist, best predictive modeller and ... you get the drift!

Few years back, I had read a response by Donald Rumsfeld , "...But there are also unknown unknowns—the ones we don't know we don't know. ..."

In most of the situations, we are in the land of 'unknown unknowns' and our choices today are hardly going to be the result of any optimisation exercise based on careful weighing of all the variables concerned. Most of the time, we have to choose the action & rationalise them later. Only, when we hit the bulls eye, our hindsight puts a label of 'success' or 'outperformance' on them. I hope you remember the famous line from Steve Jobs’ 2005 Stanford Commencement Address, "...you can’t connect the dots looking forward; you can only connect them looking backward..."

Does that mean we are helpless at the hands of future? 

Does that mean we can't optimise?

Does that mean we can only produce helpless policy makers?

Of course, the answers to above questions need to take in the nuances involved on a case-by-case basis. I will tell you what I do. Thumb-rules! When you observe life all around you, there is a development of intuition. By intuition, I am referring to the type described by Daniel Kahneman in 'Thinking, Fast and Slow'. Well, this is what I follow, if my gut says do this, I ask myself, "How much knowledge I have gathered about this situation/scenario from past experiences?". Contingent on the above two steps, the choices are made. And, borrowing from Aldous Huxley's Ape and Essence, "...Ends are ape-chosen; only the means are man's..." 

Thumb-rules, I realise make one prone to biases & prejudices. This is definitely a tight-rope walk, of balancing between thumb rules & not taking prejudiced decisions. Remember, all actions have consequences. No right or wrong actions exist, such value judgements merely cloud you!

PS : Putting 'life back' to this dormant blog!