Part of being a business lawyer is being asked to try to predict the future. 

Nearly everyday, someone asks me to guess the probability that something will happen.

“If we sign the term sheet, do you think the deal will close?”

“What are the chances the other guy breaches the agreement?”

“Will the insurance company accept my claim?”

“What’s the risk in waiting to button this up until later on?”

“What are the odds?”, they ask.

Everyone is looking for certainty, which doesn’t exist. They want comfort. They want control.

What they are really asking is, “if I do X, can I control the outcome to be Y?”

Philosophically, this begs the question: How much of life is controllable? 

Some people say none. Some say all. 

Some believe in luck. Some don’t.

Some believe they can will their way to any outcome and manipulate every result. Some choose wilful blindness and just hope everything works out ok.

The idea of control has a broad spectrum.

So, how much of life is controllable? This is the wrong question – it’s too ambiguous.

How about this: How much of life is predictable?

Well now, that’s a bit different.

There are lots of ways to make predictions about what may unfold in life. 

Maybe you’ve been in a similar situation before. Experience can be a good guide. 

Or, you can research similar situations that happened in the past – filling in the gaps in your experience with history or the knowledge of others. 

This is why older people are wise. They’ve been there before. They’ve seen the patterns and the nuance. They understand human nature simply because they’ve seen so much of it. 

They know where the edges of the spectrum of possibilities are, so they understand where things tend to fall on the bell curve. When viewed this way, it starts to feel quantifiable. There is some math behind the sage words of a wise older person.

So, how much of life is predictable? Plenty.

But let’s try to fine-tune the question one more time: How do I make effective decisions about the things I can predict, in order to steer towards an outcome I desire? 

I like this question. It’s more pragmatic.

I’ll try to answer it by describing a framework for multivariate decision-making. 

I call it: Game Theory Why.

Game Theory Why

Game Theory Why is a white board analysis. Whether you do it on an actual whiteboard or just on a plain sheet of paper, write it down. Once you’ve done it enough, you will probably be able to visualize it in your mind. But start by writing it down. 

FIRST STEP

On the right side middle of the board, write down your desired outcome.

To determine your desired outcome, ask yourself these questions:

• Whatever it takes to get there, where do you want to land on the other side of this?
• In a perfect world, designed by you, how would this all play out?
• Do you want or need money as part of the outcome? What are your financial goals?
• What about status? Experience? Which of these are most important to you in this situation? Weigh them out.
• How will your reputation be shaped by the outcome? 
• Is there a particular business outcome that you want to achieve? 

Simply put: What do you want? Articulate it clearly and write it down.

Often I’ve found people struggle with this step more than one would think. We think we know what we want until we’re forced to put it into words and clearly articulate it. 

How do you know when you’ve really nailed it? You feel confident that – irrespective of whatever happens next – your desired outcome won’t change. 

You need that confidence about your desired outcome before proceeding to the next step.

You have to start with what you want, and then work backwards.

SECOND STEP

Make a list of all of your options, down the left side of the board. 

An option is any move you could make based on your current position. Think of it like a chess board with your pieces on the left, and you get to move them across the board towards the right. Put a piece on the board for each option you have.

Sometimes it helps to categorize your options as either “offensive” or “defensive” moves. Offensive moves are actions you can take on your own to start moving towards your desired outcome. Defensive moves are more about mitigating risk – actions you can take to keep things from going off track. Oftentimes, the best paths forward combine both.

Important: It’s almost always an option to do nothing, although this option is frequently overlooked. This option comes in really handy when you are dealing with contentious situations or disputes. I almost always add it to my list by default.

THIRD STEP

For each option, go through a game theory exercise. 

Think: If I move here, this is what I predict will happen next. Then, if I move here, I predict this will happen next. And so on. Visually it looks like a line chart, with the lines connecting each move, zigzagging across a white board.

Imagine Bobby Fischer playing chess, thinking 20 moves ahead. Or the girl in The Queen’s Gambit visualizing a chess game on the ceiling.

Channel your inner chess player and map out 3-4 future moves branching out from each of your options. 

Now go back through the branches and ask yourself why you think that each next move will take place. 

Asking yourself the question “why do I think that will happen next” forces you to assess your own experience and therefore your ability to predict outcomes. If you can’t come up with a clear answer to the question “why do I think that will happen next”, you need to assess a very low probability that your prediction is correct. In other words, you’re probably wrong. 

(Ray Dalio has a similar question about investment decisions that I really like, which is: “How do I know I’m right?” You can ask yourself this, also.)

For each zigzag line on your whiteboard between moves, write out how confident you are about your answer to the “why” question. This can be in the form of a percentage or low-medium-high.

Slow down and be thoughtful during this part of the game.

The degree of confidence you have about your answer to “why do I think that will happen next” is a qualitative indicator of your ability to predict outcomes. 

Your confidence comes from your experience, whether lived or studied.

Key point: don’t bullshit yourself. If you can’t answer the “why” question confidently, admit that to yourself. In those circumstances, go find someone with credibility who can answer the question clearly and then piggyback off of their experience. And/or read as much as you can. Get the knowledge to fill the gap in your experience.

For some, this is a sobering exercise because it requires you to put aside your ego. When you ask the “why” question, your ego is going to want to over-appraise your own ability to answer the question accurately. This false sense of confidence, if left uncorrected, skews the analysis and makes the whole thing moot. 

This is the key step. Take your time with it.

FOURTH STEP

Now step back from the white board. You can see your chess pieces starting on the left, and then zigzagging across the board towards your desired outcome on the right. Each line should have a percentage or low-medium-high next to it.

Ask yourself these questions:

• Do any of my options stand out to me? Do I have a higher degree of confidence in some options over others?
• Which options are the most actionable, where you can exert a disproportionate amount of effort and control over the first few moves?
• Which options require the participation of other parties? Do any of the options add a lot of complexity by having to deal with several other parties at the same time? Watch out for this and adjust your predictions accordingly.
• Are there any ‘lead domino’ options that would trigger other actions on their own? In other words, are there any options that make the need for taking other options moot, since the other options get knocked down like dominos after the first option falls?

Finally: Make an estimate of the financial, time and energetic requirements of each option. Write this down below each option on the board.

——

Now walk away and come back in ten minutes.

Do you see the board differently?

Do you have more confidence about what to do next? If you do, then act on it. If not, erase the board and try again. The more you play, the more fun it becomes. Can you see the future?

That’s my overview of Game Theory Why. It’s not a crystal ball, but sometimes it feels like one.

DISCLAIMER: This framework is not meant to fit all of life’s circumstances. I most often deploy this in business-legal situations where someone needs to choose among several options – each with its own costs, benefits and potential outcomes.