regret minimization

A common method for thinking about decisions is to ask “in the future which decision am I likely to regret more?”   I was thinking about why this regret minimization method is so useful and came up with a couple of reasons:

– It reverses time’s “discount rate”.  There is a natural cognitive bias to overweight near term over long term events.  Thinking from the perspective of the future looking backwards helps you remove and even reverse this bias.

– It encourages action over inaction.  You tend to regret the things you didn’t do.  You’ll forget about the times you got rejected and remember the times you risked rejection and got accepted.
– It encourages (judicious) risk taking.  Risk taking leads to a life of higher ups and lower downs.  Regret minimization optimizes for higher peaks instead of our natural tendency to seek out comfortable averages.  (Regret minimization doesn’t mean doing stupid things – you’ll regret driving drunk far more than you’ll regret missing a party).

College kid I met at Columbia last week:  you won’t regret not working at Goldman Sachs, but you will likely regret not pursuing the startup idea you’ve been working on the past year.  Friend who has already sold a past startup and thinking about selling his current one:  you’ll more likely regret never giving this company a proper try before selling it.  

I think regret minimization is one of the reasons I love NYC so much.  It’s a city that is all about trial and error and requires an attitude of maximizing the serendipity around you.

5 thoughts on “regret minimization

  1. NukeGold says:

    A well known investor I know always talks about how Sergei Brin set in his office a decade ago trying to raise $100K or so for his new venture. When approaching investors I always remember this story. If you have a good thing make the potential investor think “am I passing on a future Google?”

  2. Joe Coleman says:

    “When given a set of choices in life, choose the one that will make the best memories”. Someone told me that a few years ago and I try to live my life by it.I think most people inherently understand that dying with a lot of money but no life experiences isn’t the way to go, this way of thinking is just really good at reminding us of that.

  3. Gustaf Alstromer says:

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