October 6, 2016

Make Better Decisions

"I am convinced that life is 10% what happens to me and 90% how I react to it." Charles R. Swindoll

Whether it's figuring out whether to take the job offer or not, who to date, where to go to school, or what to have for dinner, every day is full of choices.

The quality of our lives are the results of the choices that we make. We actively design our life with every decision we make.

No pressure, right?

We often have very little information on what the outcome of our choice will be, and we can have a difficult time weighing the pros & cons of a particular choice we're faced with. That's why it can be easy to get "paralysis by analysis."

That's why I want to share 3 psychological elements that influence the choices that you make, and once you understand them it will help you make better choices more quickly.

“One should make his decisions within the space of seven breaths." Lord Takandobu

Element 1: Loss Aversion

As much as we'd like to believe that we're noble creatures driven by logic & reason, we're actually weak apes who are terrified of having things taken away from us.

When we think about the future, we're much more concerned with what we could lose instead of being excited about what we could gain. Our motivations are more about what we can keep than what we can get.

This is why it's easy to get stuck in negative mental loops about how everything is going wrong in our lives instead of appreciating all the amazing things that are actually going right.

When you consider a decision, ask yourself if you're deciding to keep what you've always had, or if you're opening yourself up to getting what you've always wanted.

Don't (only) think about what could go wrong. Think about what could (also) go right.

Element 2: Intrinsic & Relative Value

Everything is relative.

“When you sit with a nice girl for two hours you think it’s only a minute, but when you sit on a hot stove for a minute you think it’s two hours." Einstein

It's the same 2 hours in both cases, but your perception of its value is different. The same goes for making choices.

Think about the proportional value of what you're going to win or lose when making a choice. If you stand to lose $5 and you're a millionaire, it's a (relatively) low risk decision. If you only have $20 to your name, though, suddenly $5 is a significant amount of money.

The intrinsic value is the same (near worthless paper), but the relative value is much different.

If the stakes of a choice seem high right now, take the course of action that will increase your relative value the most.

Element 3: Anchor Points

Anchoring is a cognitive bias that deals with our tendency to rely too heavily on the first piece of information we have when making a decision.

Think about buying a car. What's the first thing the sales person does? Takes you to look at the most expensive car on the lot.

He knows you're looking for something sensible for your family of 5. He knows they'll never all fit into that shiny sports car he's showing you. He also knows that when you see the price tag of that sports car, your mind uses that as the set point for how much cars cost.

It's now the anchor point.

Now, when you look at the minivan, its price appears much more reasonable, relative to the sports car (see element 2).

That technique is a powerful 1, 2 punch to your psychology, and it works.

This is why a sales person will help you buy your suit first, and then the little stuff later: your mind uses the price of the suit as the anchor point for making price-based decisions later (relative to that anchor point).

So when you're evaluating a decision, and how it will play out, understand that your emotional connection is directly linked to the first piece of information you consider. Use this to your advantage by anchoring yourself to a positive outcome, and go from there.


Decision making is a messy system with a lot of fuzzy math involved. Our conscious brain plays a much smaller role than we'd like to admit, so take the time to really understand how your non-conscious mind influences your choices.

Take control of your choices, and you've taken control of your life.

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