Future Based Decision Making
People tend to think irrationally. If you’ve ever continued waiting in line just because you’ve already been waiting, this next part will probably resonate.
Sunk costs are nonrefundable investments in time, money and anything else and when it comes to decision making, if you’re thinking rationally, you should always ignore sunk costs.
My interpretation of this, after learning it in Econ class, is thinking about decisions by only focusing on the future.
It became incredibly relevant in my life immediately after leaving class when I decided to stand in… the fancy sandwich line.
Great sandwiches; long line.
About 10 minutes later and halfway through the line, I started to think about how Micro Economic principals might apply to my life and my decisions.
You know, like one does.
This is where the future based decision making comes in.
I looked around at the lines for regular sandwiches and pizza and everything else, of which there were none.
I started by acknowledging my sunk costs (10 mins in line)…
and ignoring them.
Then take a look at the current situation:
Nick is hungry — Nick is in line — There’s no line for pizza
A rational decision is to get pizza, but people are irrational. It’s the same reason we sit through a bad movie after buying a ticket, stay in line because we’ve been there for so long, or continue a bad relationship after investing so much time.
Being rational or irrational with your decisions is a choice, just make sure it’s a conscious one. Default to rational but make sure to enjoy your fancy sandwiches too.
All the best,