The title of this post is a well known reference to how difficult it is to make decisions in the face of uncertainty. This pertains to many important situations in life, including assessing risk in financial markets.
Here's the thing: If you have a decision tree (likely a collection of neurons) set up to handle uncertainty, then for any given tree, you have established what are the contingencies you are prepared to deal with. The "only" uncertainty is the values of your variables. But the tree is set up, and that gives you some comfort, some level of certainty, which all humans need. Having a tree set up and well defined, you are prepared for a set of known unknowns. If a new source of uncertainty enters your framework, e.g. an unfamiliar virus named ebola, and a few cases in your home country, you are now faced with adjusting, or perhaps re-creating your decision tree. This means coming to grips with these "unknown unknowns." This is a resource-intensive process, that accesses parts of the brain which calculate negative outcomes, and costs associated with them. And any time that part of the brain is utilized, it is possible for it to mis-apply information. The reason is that that part of the brain is not a fine-grained machine, it is coarse-grained, and in the same way that monetary policy cannot fix all ills in the economy, and may have side effects, so too the cost-calculation machinery in the human brain cannot redefine a decision tree without some additional costs along the way. Minimize that process, and you will go a long way in improving your ability to make decisions involving risk and uncertainty.
