Distinguish skill from luck in outcomes

After any result, estimate how much of it was within your control versus determined by chance.

Why it works

Hindsight bias inflates the apparent causal role of actions and decisions in an outcome. In uncertain domains — investing, hiring, predicting — luck plays a larger role than experience suggests, because the feedback is noisy: the same action produces different results depending on factors outside anyone’s control. Explicitly estimating the luck component stops you from over-attributing outcomes to skill (or blame).

How to do it

1. After any significant result, write: what factors were in my control, and what factors were outside it?
2. Assign rough proportions (e.g., "60% execution, 40% market conditions I could not forecast").
3. Ask whether the proportions would shift if the result had been opposite — if they would, luck is doing more work than you thought.
4. Use this as an input to the next decision, not as an excuse or a boast.

Evidence

Luck-skill decomposition is a well-established idea in the decision-making literature, especially in domains with high outcome variance. Distinguishing them prevents both overconfidence and unfair blame. (mechanistic)

Estimating luck proportion is necessarily a judgment call with no ground truth; the value is in the habit of asking rather than the accuracy of the number.

Common mistake

Using luck attribution selectively — crediting skill for successes and luck for failures — which produces the opposite of calibration. Luck works in both directions.