The big idea
⚠️
No downside means it has not been found
The costs are real. They have just not been located yet, and they arrive later when they are more expensive.
Problem Solving & Decision Making · Lesson 2
Risk, Trade-offs and Opportunity Cost
beginner⏱ 17 min · 7 cards
Try it
Name the Trade-off
“"Rewriting will cost six months of engineering attention, during which no features ship."”
Has the cost been located, or just not mentioned?
Find what each option gives up.
Key term
The limit of expected value
Positive expected value — take the bet?
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Not if it can end you
Ruin is categorically different from loss. A series of good bets is worthless if one of them ends the series. Cap the downside first, then optimise the upside.
Named after an aircraft
The Concorde fallacy
The programme continued long after commercial viability looked doubtful, with money already spent cited as reason to continue.
Sunk costs cannot be recovered by either choice, so only future costs and benefits differ. Knowing this does not make stopping easy — it means visibly accepting the loss.
Nuance
Before anything hard to reverse
Think like a Maester
Run a premortem: it is a year later and this failed — why? "What could go wrong" invites reassurance. "It failed" invites specifics.
Quick check
What is 'resulting'?
You did it
Nice work
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