Decision Making: Risk & Reward

So, can we really control anything meaningful in our lives? Yes, we can make our own decisions, it’s just that we can’t control the externalities or the outcomes. We can control our own attitude, and this gives us critical influence on results. There is a risk of failure in everything we do, but there is also risk of failure when we do nothing. Some examples:

1.    On the recommendation of a friend, Mary bought a rising tech stock and watched it quadruple in price. She contemplated selling but decided to wait a see because it was still rising significantly. When the tech bubble burst, her investment tanked.

2.    Bill was working for a large telephone book publisher in the 80’s and 90’s. When cell phones began to become popular in the late 90’s, some of Bill’s associates decided to leave the industry. Bill loved his job and feared going into unchartered territory and switching careers, and he figured it was risky to change. By 2010, white page publishing had plummeted, as did industry employment. At 55, Bill was facing dismal opportunities for a new career.

3.    At 62, Eric became a widower. He was devastated by the loss of his best friend and devoted wife. He grieved for a couple of years. He longed for a restoration of his happy married life and hoped to find love again. But Eric was not proactive and didn’t make an effort to meet new people. He feared the vulnerability of using online dating or engaging in new activities to seek out potential relationships. He wanted to develop a new romantic relationship, but his hesitation to try dating and assume the risk of failure guaranteed his continued life of loneliness.

 Often, we don’t consider that there is risk in ignoring a potential change, and many times, this risk of a bad outcome is worse with the status quo than by accepting the risk of going in a new direction. It is important to realize that ignoring opportunities to change anything is a decision in and of itself. Therefore, it behooves us to evaluate the risk of doing nothing as well as the risk of changing. While we can’t control the outcomes of many decisions due to externalities, the better our preparation, hard work, and decision making, the greater the likelihood of favorable outcomes.