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Tradeoffs: The Currency of Decision Making

https://fs.blog/2019/12/tradeoffs-decision-making/

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Tradeoffs: The Currency of Decision Making
The disregard of tradeoffs and opportunity costs play out in the same pattern again and again in our lives. Every decision we make carries an opportunity cost. If we don't budget wisely, we end up wasting time and energy on things that don't matter. Here's how to do it right.

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Tradeoffs

Tradeoffs
Every decision we take, has a tradeoff, an opportunity cost. Instinctively we try the all-out approach, resulting in failure.
The real problem lies in our judgment of the opportunity cost.

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Striving for Everything

Striving for Everything

A tradeoff is inevitable in almost every decision we take, as we usually forego some opportunity or benefit in our choices.

Many people strive for everything and believe there are no tradeoffs.

Focussing on less can get you something but focusing on everything may get you nothing.

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Having "Everything"

Having "Everything"

We seem to think that the people around us have everything in life.

Tradeoffs in others take time to become apparent. Everyone lets go of something, making a sacrifice, to be able to focus, investing time and energy in what is important to them.

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Balancing Everything is Impossible

Balancing Everything is Impossible

It becomes impossibly hard to completely fine-tune and balance your work, family, health, relationships, friends and hobbies. 

We may have to let go of one of the areas to be able to fulfill the others.

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Barry Schwartz

The necessity of making trade-offs alters how we feel about the decisions we face; more important, it affects the level of satisfaction we experience from the decisions we ultimately make.

Barry Schwartz

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Time is a Tradeoff

Time is a Tradeoff
Big decisions involve opportunity costs. Time is the price we pay for the choice we make.
Time is always a constraint as if we spend time doing something, we are not doing something else at that time. We can spend time in cultivating better habits than to unconsciously waste it daily doing trivial tasks.

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Focus your Energy on Less

Focus your Energy on Less
In the countless decisions we make, it is a good idea to focus your energy on less, considering the tradeoffs.
This makes us eventually make satisfying choices, that we can prioritize.

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SIMILAR ARTICLES & IDEAS:

10/10/10 Rule

Before making a decision, considers how you’ll feel about this decision in 10 minutes, 10 months, and 10 years.

It’s easy to make short-term decisions that may be beneficial 10 minutes...

Pareto’s Law

In anything we do, there’s always ~20% of activities that will deliver 80% of our desired results.

It’s easy to be wrapped up in ‘busy’ work without ever getting anything done. Pareto’s Law is a useful mental model to be more effective, rather than just be efficient.

Parkinson’s Law

Work expands so as to fill the time available for its completion. So try placing artificial time limitations.

If we’re given three hours to complete a task that normally would take an hour, we’ll find a way to fill those three hours. However, when we’re down to the final thirty minutes, we’re suddenly feeling the pressure to get things done. 

Not Making Good Decisions

We are exposed to biases that influence our ability to make good decisions.
  • We are quick to jump to conclusions because we fail to search for information that might disprove our thoughts.

The Four Villains of Decision Making

  • Narrow framing: The tendency to define our choices in binary terms. We ask, "should I, or shouldn't I?" instead of “What are the ways I could...?”
  • Confirmation bias: People tend to select the information that supports their preexisting attitudes, beliefs, and actions. 
  • Short-term emotion: When we’ve got a difficult decision to make, our feelings occupy our minds. And this doesn't add any new information that could benefit us. 
  • Overconfidence: People often think they know more than they actually do about how the future will unfold.

Defeating Decision-Making Villains

  • Counter narrow framing by widening your options. Expand your set of choices.
  • Confirmation bias leads you to gather self-serving information. Analyze and test your assumptions to overcome the bias.
  • Short-term emotion will tempt you to make the wrong choice. So distance yourself before deciding.
  • Prepare to be wrong. Don't be overconfident about how the future will unfold.

Default options

Deciding is too much effort so we’re likely to just stick with the default or safer option if it’s already been chosen for us. 

When we get offered too many choices, the same...

Best decision making happens in the morning

This is when serotonin is at it’s natural high, which helps to calm our brain. Thus, we feel less risk averse and so we can face risks and make harder choices.

The part our bodies play in decision-making

If we’re feeling hunger, thirst or sexual desire, that can actually spill over into the decision areas of our brains, making us feel more desire for big rewards when we make choices. 

This can lead us to make higher-risk choices and to want for more.

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