It is a quirk which makes us value the present opportunity more than a future opportunity. This is known as ‘Present Bias’ in psychology.
Example: If offered a choice between getting $100 now or $150 after a year, we are more likely to take up the money offered right now.
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... and boils down to what we give up to attain something. Our mindsets are inclined towards pleasure and resistive towards pain. We normally like to think in terms of gaining, success, and acceptance.
We forget that there are always two sides of the coin and loss, failure and rejection come hand in hand whether we like it or not.
Decisions are a cost-benefit analysis of risking something small for the opportunity to gain something big.
Trade-offs are not something as simple as flipping a coin. Our values guide us towards what we want in life, and it is not the same for all. Example: Buying a house has a trade-off of mortgage for the next ten or more years. This is subjective and depends on what we value in life.
Indecisive people suffer because they don’t know their inner values and what they care about.
Humans are not good at impartially evaluating the risks and rewards of any decision.
Our ‘thinking’ brain loses out to our ‘feeling’ brain, that is our natural cravings, desires and urges. We can curb this by being self-aware and thinking through any important decision.
If we practice something (learning a new language for example) for just 30 minutes a day, we normally do not realize or understand that by practising daily for 365 days, we are better in that activity 3778 per cent or about 38 times.
If we are practising the same skill every other day, we do it for 180 days, that is half the effort and improve by 611 per cent or about 6 times. Missing out on just one day of practice has vast compounding effects by the end of the year.
Our perceptions and emotions get skewed when we are in the presence of extreme beauty, power and wealth.
People of status and power are constantly bending reality around us and creating a ‘Halo Effect’, making us feel that they are smarter, more amusing and charismatic than they really are. This affects our judgement and decision making.
Running away from decisions and being indecisive is also a decision. Action becomes your friend here, and it is good to get out of the comfort zone and take risks, instead of being in a mental paralysis.
When starting a project that requires time, energy and resources, the cost-benefit ratio is a good rule for deciding if the plunge is worth it.
One has to think about the risk in terms of probability, while also keeping in mind what is at stake: Will the effort, time, money and resources that are spent will go down the drain or will all of it still provide value in case the primary goal is not reached.
Our emotions are obsessed with the present moment because it’s difficult to look past our immediate fears and anxieties. And this prevents good decision-making.
The sweet spot in decision-making is to find the short-term failures that enable huge long-term successes to happen in the first place.
Solution? Spend less time trying to amass all the information and more time better defining the problem so you can find the right information.