Why We Have Trouble Making a Change

When faced with a tough decision, most people choose to do nothing.

This is the basis of the Status Quo Bias, first proven in a series of experiments in 1988 out of Harvard. The general idea is that people are emotionally attached to the current state of affairs and are skeptical of any change from that baseline.

This means that we tend to need overwhelming proof to make a change, even when that change would be the better option. Continue reading “Why We Have Trouble Making a Change”

Defeating Decision Fatigue in a World of Choices

We live in a world where decisions abound. We have a plethora of options when it comes to just about everything. The alarm goes off and we decide whether to get up or hit the snooze button. We decide what to eat for breakfast. We decide which shampoo and soap and toothpaste to use. We decide which clothes to wear. We decide what method of transportation to use to get to work. We decide which route to take.

And that’s all before getting to our desk on a simple morning. Continue reading “Defeating Decision Fatigue in a World of Choices”

The Downside of Keeping Your Options Open

When given an option between a reversible decision and an irreversible decision, we tend to prefer the former. We like money back guarantees. We like no strings return policies. There is something comforting about knowing that we can change our minds in the future.

There is less pressure on us to make the perfect choice. We are not stuck if we make a bad decision.

We’re also inadvertently undermining our own happiness.
Continue reading “The Downside of Keeping Your Options Open”

The Importance of Opportunity Cost in a Happy and Wealthy Life

One of the central concepts in decision-making is the concept of opportunity cost. Every decision we make on a daily basis, whether it is an involuntary part of our routine or an active choice, can be evaluated using this overarching concept.  Essentially, the idea behind opportunity cost is that oftentimes a choice that we make will close the door on other choices. If I go to the beach this weekend, I can’t also go to the mountains this weekend. If I spend $300,000 on a Ferrari 458 Speciale, I can’t invest that $300,000 in the stock market (or ever retire). Continue reading “The Importance of Opportunity Cost in a Happy and Wealthy Life”