Keys to Better Decisions:
- Use Opportunity cost (never sunk cost)
A “sunk cost” is something already spent or consumed (an “unrecoverable past expense”). Costs already incurred are irrelevant in considering what to do in the future. Forget about what was already spent. Instead, ALWAYS use “opportunity cost”: the highest-value activity forgone. (i.e. What can I not do if I choose this?)
- Understand Subjective Value
Subjective value means that everything means something different to everyone. People place different values on different things. This is key to making decisions and negotiating. It’s easy to find a win-win when both parties understand one another’s values.
- Understand Comparative Advantage
Comparative advantage is the reason the tagline to this blog is “Be You”. No matter what, everyone has something to offer. This is closely related to subjective value. You’ll never be the best at everything, but you’ll always be the best at something.
Two AWESOME Books that help with better decision making (affiliate links):
Fooled By Randomness by Nassim Taleb
Thinking in Bets by Annie Duke
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