Life is full of uncertainty, risk, opportunity, and randomness. How can we gain an edge in our decision-making?
There is much that we can neither predict nor controlâbut we can significantly improve our odds of favorable outcomes in both work and life. By understanding risk, chance, and uncertainty, we can harness the power of the randomness all around us to positively impact our lives.
After two decades of investigation, Hossein Pishro-Nik distills his personal experience, research, and feedback from students into actionable methods that will help you make more confident decisions, even without a background in statistics. You'll learn:
Usable Insights: Practical applications of probability, statistics, finance, information theory, and machine learning
Entrepreneurial Edge: Strategies to assess risk and make smarter business decisions
The Unexpected Link: The surprising connection between privacy and randomness
AI in the Real World: Applying AI lessons to everyday decision-making
Demystifying the Complex: Clear explanations of powerful math concepts previously not covered for all readers
Practical Uncertainty is an educational guide that offers real-world insights to equip you with tools for risk-taking and decision-making in unpredictable scenarios. This book helps you master uncertainty, improve daily habits, and increase your chances of meeting your goals.
Life is full of uncertainty, risk, opportunity, and randomness. How can we gain an edge in our decision-making?
There is much that we can neither predict nor controlâbut we can significantly improve our odds of favorable outcomes in both work and life. By understanding risk, chance, and uncertainty, we can harness the power of the randomness all around us to positively impact our lives.
After two decades of investigation, Hossein Pishro-Nik distills his personal experience, research, and feedback from students into actionable methods that will help you make more confident decisions, even without a background in statistics. You'll learn:
Usable Insights: Practical applications of probability, statistics, finance, information theory, and machine learning
Entrepreneurial Edge: Strategies to assess risk and make smarter business decisions
The Unexpected Link: The surprising connection between privacy and randomness
AI in the Real World: Applying AI lessons to everyday decision-making
Demystifying the Complex: Clear explanations of powerful math concepts previously not covered for all readers
Practical Uncertainty is an educational guide that offers real-world insights to equip you with tools for risk-taking and decision-making in unpredictable scenarios. This book helps you master uncertainty, improve daily habits, and increase your chances of meeting your goals.
There we were, my wife and I, standing in front of a gorgeous house we were about to call our own. Weâd been house-hunting for a while, and on the face of it, this one seemed to satisfy almost all of our criteria. It was perfect. But somehow, we were not happy. For some mysterious reason, we got a bad feeling when we visited the house. Something was wrong, but we could not figure out what it was.
We soon discovered that the reason behind our negative feelings was more unexpected and deeper-seated than I could have anticipated.
I was only two years old when the war startedâan eight-year-long war that eventually claimed the lives of more than half a million people. Air raids and missile attacks on my hometown were common. I remember the terrifying sounds of bombs and missiles striking seemingly random areas of the city, sometimes close enough to my neighborhood to shake buildings and shatter windows. I grew up holding my breath and waiting for the next blast.
Many of us who grew up with memories of war have an understandably unfavorable feeling about any sound that reminds us of rockets, bombs, or bullets. As it turned out, there was a shooting range near that perfect house we intended to purchase. Standing in front of the house, we could barely hear the gunshots. The low level of noise was almost nonexistent for the residents of the neighborhood. But apparently not to us. I theorized that our dislike for the house stemmed from the noise from the shooting range subconsciously putting us in a bad mood whenever we visited. We did not even realize the cause until someone casually mentioned the shooting range, and we finally understood where those bad feelings were coming from.
We ended up not buying the house. Was this a good decision? Well, there are several aspects of uncertainty, randomness, and decision-making we can consider in this story.
Letâs start with my initial bombing experience. Is it rational to be so worried when living in a city under siege? On the surface, if you were in this situation, it is quite unlikely that you would be directly impacted by an incoming bomb. Say your city has several million residents, and each attack directly impacts a few hundred people or so. The probability of a direct impact right where youâre standing at any given moment is less than 1 in 1,000. However, you probably agree that this situationâwhere lives could be lost in the blink of an eyeâis more complicated than a simple probability calculation.
The story of my wife and I deciding not to buy the house exemplifies the idea that our decisions are impacted by a variety of factors, many of which we might not even be aware of. Often we cannot accurately assess the quality of our decisions, even after we make them. Was the nearby shooting range the true reason for our bad feelings about the house? Could other factors have played a role without our knowledge?
Interestingly, even if I had a crystal ball that could have shown me what would have happened had we purchased the house, I still would have had difficulty accurately assessing the quality of our decision not to buy the house due to factors such as hindsight and outcome biases.
Life is messy and full of uncertainty, risk, opportunities, and randomness. Human decision-making is too complex to be addressed with a few general rules. So how do we make sure we are making good decisions under uncertainty? In other words, what can we do to gain an edge in our decision-making processes? This was the question I set out to explore more than a decade ago, and it is the question at the center of this book.
WHAT THIS BOOK IS ABOUT
Practical Uncertainty combines what I found to be the most useful concepts and ideas in uncertainty, risk, randomness, and decision-making; presents them in a coherent, practical, and usable way; and offers intuitive insights to better help you internalize these concepts. It also aims to provide you with an understanding of machine learning (ML) and artificial intelligence (AI) decision-making through the lens of uncertainty.
Randomness and uncertainty are all around us, and they impact us in surprising ways. This book is intended as a practical and educational manual that will help you understand and internalize useful tools for risk-taking and decision-making under uncertainty, both by humans and AI.
WHY I WROTE THIS BOOK
Over the course of two decades in my career as a researcher, in my research, I have heavily used tools from probability, statistics, information theory, and related fields. I even published a textbook on probability. However, over a decade ago, I became seriously interested in how these often-abstract tools can be used in personal and social life. I realized that risk, uncertainty, and randomness are vital parts of business, sports, politics, and almost every personal or societal decision we encounter.
I began researching and attending seminars and workshops on uncertainty and randomness in real life. After a while, I started teaching various university courses on uncertainty, risk, and decision-making that were mostly based on the vast available literature on the subject. I also became interested in using AI decision-making in engineered systems as a part of my research agenda.
Then, to validate my teaching methods, I started to keep track of how I was using the tools I was teaching in my own personal decision-making. The result surprised me: after two years of teaching the course, I could attribute very few of my decisions to my new âexpertiseâ in decision-making, and I realized that very little of what I was teaching now would have helped me make better decisions in the past. What was going on? Did I have it all wrong?
The realization that few of the tools I was teaching my students had proved useful in my own life was a wake-up call for me. If I was not able to use most of these concepts, how useful could they really be to my students? How could I remove the less consequential stuff and focus on the most fundamental and useful concepts for real-life decision-making? That became my primary objective.
I began to notice that a large part of the content I was using in my courses and seminars, although academically interesting, was not usually applicable in practice (at least to my personal decision-making experience). In the end, I stripped away anything that wasnât directly relevant to our daily lives, leaving only those lessons that I or the students in my classes had found helpful.
Slowly, interesting patterns emerged. Finally, I was able to combine these useful but somewhat disparate ideas into a coherent whole and present them in a practical and actionable way. It turned out that it was the intuitive understanding of uncertainty and how it impacts our lives that was particularly useful.
I also noted that this foundational look at uncertainty is at the core of machine learning (ML) and AI decision-making. This topic fit very well with the other remaining core content and thus was added to the course (and now to this book). For those unfamiliar with ML, the presentation in this book should be self-contained; for those already familiar, I hope my approach can provide new insights and better understanding.
During this period, on several occasions, I had to make tough life-and-death decisions, which helped a lot in practically evaluating the decision-making strategies described in this book. At the same time, my research group and I were building autonomous systems whose purposes were to make high-impact decisions. For example, we designed a group of autonomous drones that could help in search and rescue operations. A good decision by such autonomous agents could save lives, while a bad decision could have catastrophic consequences.
To develop my research further, I also tried to take all opportunities to gain practical experience with randomness and uncertainty such as engaging in finance and entrepreneurial activities. For example, financial markets are a good place to experience randomness and uncertainty, so I opened an investment account and started to manage my own small portfolio. This was shortly after the 2008 financial crisis, so there was a lot to learn. While I had been familiar with theories of finance for years, taking risks with a sizable portion of my own money was certainly a fruitful experience.
This book is thus the result of my exploration, teaching, and research on decision-making under uncertainty. Everything discussed within it is some concept or trick that my students or I found personally useful in some respect, either directly or by helping to better understand and internalize other useful concepts.
HOW THIS BOOK CAN HELP
There are many admirable books and articles relating to the fields touched upon in this book: chance, uncertainty, risk, decision-making, psychology, and machine learning. I have greatly benefited from and been influenced by many of these resources. Many of them, combined with my own research, experiences, and research, have shaped the content of this book. However, my hope is that this book can benefit even the readers familiar with the existing excellent body of work for the following reasons.
First, the focus here is mostly on the question âHow can I use this in my own personal and work life?â One reason the courses I taught were less effective in the beginning years was that I tried to cover too much. With this in mind, my goal for this book was to identify the most useful concepts and ideas surrounding decision-making under uncertainty, then present them in a concise and usable way.
Second, some insights and techniques in this book might be novel or barely covered elsewhere. For example, I will discuss some practical applications of information theory in decision-making, privacy, and finance that I do not believe have been adequately covered before for the general audience. The combined presentation of human decision-making and machine learning under the umbrella of uncertainty and randomness is similarly uncommon and, I hope, insightful.
One surprising finding from my teachings is that it is easy to misinterpret or misunderstand the implications of some influential works on the topic of uncertainty. For example, I often saw my students drawing gloomy messages from certain readings: that our intuition is hopeless when it comes to randomness and we cannot do much to improve it, or that success is largely determined by luck and we have little influence on our trajectory. I found this extremely frustrating. This kind of thinking was the exact opposite of what I had in mind when sharing this knowledge.
I strongly believe that we can work to improve our decision-making. We can better understand uncertainty, and we can use this understanding to increase our chances of achieving our goals. Thatâs why another focus of this book is to reinforce this important conclusion by providing applicable ideas and strategies. Thus, you will find out that this book is written with a somewhat positive outlook in mind. It is not all doom and gloom!
As I mentioned above, a large number of resources that I used over the years, combined with my own research, experiences, and observations, have shaped the content of this book. Youâll find a list of relevant resources in the Recommended Reading section at the end. Anything useful in this book should be mostly attributed to the people I learned from, and any shortcomings should be assumed mine.
HOW TO APPROACH THIS BOOK
ï»żPractical Uncertainty begins with simple, well-known concepts and gradually moves toward those that are less covered in the existing literature. This structure is intended to make the book easy to read for all audiences. What does that mean for you? If the beginning of the book seems somewhat elementary or even a bit boring, please read on! More exciting topics are soon to come. Even if you are an informed reader on the subject, I recommend reading the entire book, as some treatments of the material might be insightful.
On a related note, a brief word of warning (or perhaps assurance): this is not a rigorous academic science or math book. If you are expecting frequent references to academic journals, discussions on historical data, and so on, this is not the book for you. Instead, I have focused on providing applicable insights and takeaways for life and work.
The book is intended to stimulate pondering as you read. I do not try to sugarcoat or oversimplify anything. Some of the ideas can only be internalized after thinking deeply about them and putting them into practice. That is why I hope you read this book more than once.
Some ideas in the book are based on mathematical arguments. In the interest of making the book accessible, practical, and to the point, I have focused on building intuition and insight rather than providing mathematical or scientific proofs. That said, I have tried hard not to sacrifice useful concepts or mislead readers by oversimplifying things. This means there is, indeed, some minimal but inevitable math in the book. I do briefly explain mathematical concepts as they relate to the topics at hand, but for those readers who dislike math, my hope is that you still find the material useful.
Throughout Practical Uncertainty, I have utilized my personal experience, feedback from my students, and my research and observations over the years to continuously improve the presentation of this material. I hope the resulting book is effective and helpful to readers and, hopefully, enjoyable to read.
Now letâs get started!
What makes us choose one thing over another? How do we decide anything when constantly bombarded by a multitude of choices every day? Does making one choice over another, whether minute or substantial, directly influence our personhood? I believe it does, and that choice is an improbable path that leads us away and back to the self.
So, how can we make informed choices in the age of AI as it intersects the vastness of human consciousness? Hossein Pishro-Nik aims to demystify this in his pivotal book,  Practical Uncertainty: Useful Ideas in Decision-Making, Risk, Randomness & AI.Â
Hossein ascertains that stress can lead to poor choices, and in a world where our fortitude against stress is constantly being reshaped, reimagined, and reinstated, this book is more helpful than ever.Â
Practical Uncertainty reads as an accessible educational handbook rich with personal stories, real-world applications, and mathematical equations to engineer wise decisions in the face of uncertainty.Â
I chose this book because in the quest for liberation from the limits of logic, enter AI, Machine Learning, and the inception of something new, seemingly limitless, that can teach us about the limits of logic in an irrational world.Â
This is indispensable reading for everyday applications of AI in the real world. Readers will learn about AI's lessons and limitations to inform daily decisions, transforming uncertainty into more informed choices. By tapping into the wisdom of the author's knowledge, readers will also gain valuable, coherent insights that make applying the principles of AI enjoyable and beneficial.Â
The focus on real-world applications to improve daily habits to decrease uncertainty and increase informed decision-making appeals to the conscious human within us all. Curious readers will enjoy the exhilaration of discovering something novel and applicable. While the knowledge is accessible and helpful, I particularly liked the ratio of personal stories to mathematical equations.Â
Life is full of uncertainties, and there is much that we can neither predict nor control. Nevertheless, a key message in this book is that we can significantly improve our odds of favorable outcomes, specifically in the long run"-Hossein Pishro-Nik