Positive Unknown-Unknowns

When we make decisions, it’s useful to be cognizant of unknown-unknowns. Almost in every case, we think about unknown-unknowns in a negative sense. If we’re venturing into unknown territory, we accept that it’s likely we’ll stumble upon Black Swans: improbable events that throw a wrench into our plans. Typically, we’ll draw on our experience to take the path we figure has the fewest negative unknown-unknowns. We may choose to stretch something we already know instead of adopting something new. Brooding on negative unknown-unknowns is extremely useful, and fairly commonplace.

I think it’s equally useful to invert the traditional thinking about unknown-unknowns and ask ourselves: How many positive unknown-unknowns might we face with this option? Might we face more positive black swans, than negative? In effect, what would give us the most positive optionality?

When making decisions, we weigh most strongly the first-order effects. We’re not taught to systematically think through the second- and third-order effects. As we get further away from first-order effects, our ability to predict effects decreases exponentially. There’s a higher chance that we’ve missed second-order effects, than first-order effects. These missed effects are what we call unknown-unknowns. There are too many variables to keep track of and the interactions between them, while governed by simple rules, become unmanageable to the human brain. You can attempt to combat this with expertise, but you must face that you won’t catch them all.