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Making a decision becomes overwhelming due to the many potential outcomes and risks that may result from making the wrong choice. Having too many approximately equally good options is mentally draining because each option must be weighed against alternatives to select the best one.
Satisficing is a decision-making strategy or cognitive heuristic that entails searching through the available alternatives until an acceptability threshold is met, without necessarily maximizing any specific objective. [1]
Sample flowchart representing a decision process when confronted with a lamp that fails to light. In psychology, decision-making (also spelled decision making and decisionmaking) is regarded as the cognitive process resulting in the selection of a belief or a course of action among several possible alternative options.
The objective of a choice is generally to pick the best option. Thus, after making a choice, a person is likely to maintain the belief that the chosen option was better than the options rejected. Every choice has an upside and a downside. The process of making a decision mostly relies upon previous experiences.
In contrast, a choice with excessively numerous options may lead to confusion, reduced satisfaction, regret of the alternatives not taken, and indifference in an unstructured existence; [2] [3]: 63 and the illusion that choosing an object or a course, necessarily leads to the control of that object or course, can cause psychological problems. [4]
By understanding how implied volatility works and how it impacts option prices, you can make more informed decisions and potentially improve your trading results. Just remember that implied ...
The way a maximizer knows for certain is to consider all the alternatives they can imagine. This creates a psychologically daunting task, which can become even more daunting as the number of options increases. The alternative to maximizing is to be a satisficer. A satisficer has criteria and standards, but a satisficer is not worried about the ...
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