Tuesday, September 09, 2008

Three Sorts of Regrets

I was just commenting on Chris Guillebeau's Blog and came up with an economic perspective on regrets using the ideas of efficiency and uncertainty. We can regret efficient choices and inefficient choices as well as certain choices and uncertain choices.

The most basic principle of economics is that we can't have everything we want - things, including time, are scarce and our choices are constrained. When we optimize and choose the best option (doing the best we can under the circumstances is economically "efficient") we may regret the things we didn’t do because they clashed with our choice. If we want to live life with no regrets as Chris is discussing, we need to learn how to not regret (too much at least) what we had to sacrifice to get where we wanted to go.

The second case is where we make inefficient choices. Where there are things which we could have done with little loss or trade off and we didn’t do them. We just lazy or fearful or whatever and didn't overcome that barrier. We didn't use the resources at our disposal effectively. This is the "no regrets" that Chris is actually talking about.

A third case is where we thought we were doing the best we could but were wrong because either we had bad information or due to pure randomness or uncertainty. Here the regret is similar I think to the first case. We can focus on regretting the bad choice we made or try to “move on”.


Revanche said...

I like this breakdown. I think the idea behind it has been sort of in the back of my mind but sometimes have trouble properly categorizing past decisions accurately.

mOOm said...

Well, that's because in the real world there is always some uncertainty and we are never perfectly efficient in how we use the resources we have available. So most real world cases will have something of the "sacrifice", "laziness", and "mistake" cases combined. In some cases though one of these will dominate in others it will be much hazier if we could have done better.