Pre-Commitment

Deciding a rule in advance, at a moment when nothing is at stake, in order to bind the version of yourself that will face the decision under pressure.

Example

Writing down that you will treat a belief as mistaken rather than early if a named figure comes in below a threshold - before you hold any position that the conclusion would affect.

Important

A pre-commitment that a sufficiently attractive opportunity can suspend is not a rule. It either binds when it is inconvenient, which is the only time it can bind, or it is a preference you wrote down.

Related terms

• Anti-Thesis — The written list of categories an investor has decided in advance not to invest in, each with the reason and an explicit exception clause.
• Falsifiable claim — A statement specific enough that some future fact could show it to be wrong.
• Decision journal — A written record of why a decision was made, written at the time it was made, and never edited afterwards.

Lessons that explain it

• Write the follow-on policy before the requests arrive — Deciding in advance what would earn more capital removes the pressure, relationships and urgency that distort follow-on decisions when a request is already on the table. (10 min)
• Write the decision down before you know how it turns out — A decision record captures what you decided, why, the conditions, the main risks and what would change your mind. It turns each decision into something you can learn from later. (9 min)
• The list of things you have decided not to do — An anti-thesis is written in advance and costs nothing to write, which is exactly why it works when the attractive version of the thing you swore off finally shows up. (9 min)

All 578 terms in the Investing glossary