Choices and costs

• Circle of competencetype: mental model · evidence: not directly tested

  You don't have to know about everything, just exactly where your knowledge ends, and decide within that boundary.

• Clickbait (curiosity gap)type: effect · evidence: contested

  Headlines that don't tell you everything ("You won't believe what happened next") are supposed to make us curious and get us to click.

• Compoundingtype: mental model · evidence: supported

  When gains are added to the base and go on to earn gains of their own, growth is exponential, not linear.

• Cost of action vs cost of inactiontype: mental model · evidence: supported

  Doing nothing is also a choice, with its own costs.

• Decoy effecttype: effect · evidence: supported

  A third option, clearly worse than one of the two main options, makes that option look better and get chosen more often.

• Default effecttype: effect · evidence: supported

  A pre-selected option, the one that applies if you do nothing, is chosen far more often than when it has to be chosen actively.

• Diminishing returnstype: mental model · evidence: supported

  Each extra unit of a good thing usually brings less than the one before.

• Endowment effect and status quo biastype: effect · evidence: strong

  Something seems more valuable once it is ours, and an option seems better when it is the one we already have.

• First-order negative, second-order positivetype: mental model · evidence: not directly tested

  The immediate consequences of a decision (first-order) often pull in the opposite direction from the ones that follow them (second-order).

• Framing effecttype: effect · evidence: strong

  The same choice, described in terms of gains or of losses, gets different answers.

• Loss aversiontype: effect · evidence: supported

  A loss weighs more than a gain of the same size.

• Maximizing vs satisficingtype: mental model · evidence: contested

  Some people look for the best possible option (maximizing), others choose the first option that clears their bar (satisficing).

• Opportunity costtype: mental model · evidence: strong

  The real cost of a choice is the best alternative you give up.

• Pareto principletype: mental model · evidence: not directly tested

  In many fields, a few causes produce most of the effect.

• Peak-end ruletype: effect · evidence: supported

  When we remember an experience, we judge it mostly by its most intense moment and by how it ended, and its length matters surprisingly little.

• Sunk costtype: effect · evidence: supported

  Money, time or effort already spent won't come back, whatever you decide now.

• Via negativatype: mental model · evidence: supported

  Sometimes the best improvement is to take something away, not to add.