Making a ‘right’ decision

Decision-making can be difficult for anyone. So how do you increase your chances of making it a 'right' decision?

According to the Chinese Zodiac, people born in the year of the Pig are thought to have good personalities — kind, generous, honest — and to be blessed with good fortune. But whether you really prosper is up to you and your decisions. The choices you make.

How do you make ‘right’ decisions? Let’s ask Peppa Pig’s family.

The family goes boating at the lake one day. There are three types of boats: canoes, sailboats and pedalos. Daddy Pig chooses a pedalo, because canoes require paddling (which is hard work) and sailboats are too difficult to maneuver. But he, or anyone else in fact, did not realise pedalos require you to pedal — manually.

The pedalling makes Daddy Pig tired. When the family races with two others on the way back to shore, Mummy Pig takes over, but even she gets tired fast. Danny Dog and his father win easily in a sailboat because it has an engine (which even Captain Dog didn’t know of), while Peppa Pig’s family comes in last.

Exhausted, Mummy Pig announces they will take a sailing boat next time, and Daddy Pig agrees.

Mummy and Daddy Pig’s regret is common. We have all wished we had known something before making a certain decision. But can we really say that the sailboat is the best choice, just because the pedalo was the wrong one this time?

This shows regret aversion in Peppa Pig’s parents, where a decision is made to avoid regret — not to achieve something, or where options are weighed first. Regret aversion can make one even more rash in the next decision.

So how we properly make a ‘right’ decision? Understand how you made the initial decision, and how regret affects you. Rather than simply going with the opposite, or the ‘winning’ one, consider all options first, and weigh their pros and cons. Then put confidence behind your decision, because that is your ‘right’ one.

At Eastspring Investments, we accept that it is extremely hard to be more “informed” than the market. We believe it is better to be approximately right than precisely wrong. Read our insights at https://www.eastspring.com/insights

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