Opportunity cost might be the most under appreciated tactics we can use to improve our decision making. You can literally hack your own brain by explicitly framing what else you can do with an alternative choice.
This is one of my favourites. Here’s the experiment by several researchers.
Methods:
Participants were paid $10 for work. They were told they had to use the money to buy either a really nice coffee mug ($10) or a simple mug ($3.99) – 50% of participants were told explicitly if they bought the cheap mug they’d have $6.01 to buy something else.
Results:
Simply telling people about the opportunity cost (i.e. what else they can do with the money) increased the number who bought the cheap one from 40% to 60%.
Conclusion:
Opportunity costs are often neglected when making decisions. “bringing to mind opportunity cost can markedly affect preferences” and selected choices.
Check out the original study here.
Next time you’re deciding between several choices, explicitly outline the alternatives in the frame of an opportunity cost. This can be applied with time, money, or even decisions in healthcare.
We use this tool at Advanced Performance to optimize decision making when we work with high performing teams.
