Risky Decision-Making – 3 Methods

Which job offer should you take? Which new product should you launch? Which career has the most future potential for you?

These decisions have a common theme … lots of uncertainty.

Here’s how you can improve your chances of making the right decision.

Method #1 – Maximax (Optimist)

The maximax approach considers outcomes optimistically. The maximum of the maximums or the “best of the best”.

Do you want to continue to be a subcontractor, earn less money and not build equity in a business? Or do you want to launch your own business?

Using this maximax method you first assess each of the business approaches. What’s the best that could happen for each? Then the one that has the largest value for you. Choose the career with the largest value for you. Obviously building your own business will potentially earn more money and build equity in your business.

Method #2 – Maximin (Pessimist)

This approach considers your choices pessimistically.

Begin by looking at the worst that that could happen for each choice. Should you put your money in a bank account or should you invest stock?

Now assume that the worst that the worst happen. Your stock price could go from $50 to $5. The interest you earn on your bank savings could go from 2% to 1%.

Choose the investment decision which has the best worst case scenario. The maximum of the minimums or the “best of the worst”. So you’ll put your money into a savings account because you may lose more money in the stock.

Method #3 – Minimax (Opportunist)

Minimax decision making is based on opportunistic loss, also known as regret. Should you look for a significant other or should you continue to be single.

Identify what you would lose from each option. Then choose the minimum of the maximum loss for each option. Choose the best of the worst potential losses (also known as regrets) to your happiness.

Be a ripple in the pond. Make our world a better place!!! 

Do the right thing! Pay it forward. Together, let’s make a positive difference. 

“To give back and be given is to feel the sun from both sides” … Harry Mingail

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