The Affordable Loss Principle in Romantic Relationship
Whether you’re single, engaged, married, you will still need to make countless decision about your love life. I’ll write about how The Affordable Loss Principle will help you make decisions about your romantic relationship, e.g to answer these following questions :
“Should I text my ex first?” (Idk, maybe you want to collect debt)
“Should I get a divorce?”
“Should we get married NOW? Or is it better to wait for another years.”
“Is it ok if I ask my co-worker for a date?
When I heard some people discuss about those kind of choice, there are people who consider about how likely their choices will give them positive or negative consequences. They use the pros and cons principle.
The other scheme is they try to find evidences and opinions about how likely their action will lead to the desired result. If I apply this scheme to the last question (Should I ask my co-worker for a date?), the decision to text your ex or not, is based on your final conclusion of the probability that your co-worker will say yes and that it won’t affecting your career (assuming that that is your desired outcome).
Those two frameworks could help you make predictions, but in this life you can not control everything. Even if the probability of the desired outcomes is 95%, there is always a room that the worst case scenario might happened. No matter how likely your co-worker seems to like you back, there’s always a possibility that your co-worker will reject you and things become awkward at work. Hence, how much loss you can bear is critical aspect.
Here’s when you should put The Affordable Loss Principle into considerations.
The Affordable Loss Principle
Expert entrepreneurs limit risk by understanding what they can afford to lose at each step, instead of seeking large all-or- nothing opportunities. They choose goals and actions where there is upside even if the downside ends up happening (Nicolas & Sarasvathy, 2009).
The principle also align with a statement from a wholesale banker about the ultimate deciding factor that we should consider when we’re about to make an investment. We should consider “What is the worst case scenario/the worst loss that could happen from the investment? If that happened, is your company going to collapse? If your company will collapse because of the worst loss, then you shouldn’t make the investment.”
So when you ask “Should I ask my co-worker for a date?”, you can use the same principle with a question about investment such as “Should I make 1.000.000.000 USD investment in IT infrastructure?”
If your company could collapse because of the 1.000.000.000 USD investment risk, then you might want to consider to do 500.000 USD instead.
Estimating what is affordable does not depend on the venture but varies from entrepreneur to entrepreneur and even across his or her life stages and circumstances (Nicolas & Sarasvathy, 2009).
Back to the #1stworldproblem question, should you ask your co-worker for a date? Let’s see what is the worst scenario for you.
You might get rejected and it might hurt your self-esteem. But how much you might get hurt depends on how much you like your co-worker. The second point is your life circumstances. Do you currently have important deadlines? If your workload is currently low, maybe low self-esteem wouldn’t ruin your career. Therefore, you might able to handle the worst case scenario.
Let’s say that you can’t bear to meet your co-worker ever, anymore, if you got rejected. You’re definetly would resign if that happened. How about your chance to find another job? How’s your financial situation? If you have a strong CV and finding another job is a piece of cake, then you can ask your co-worker for a date.
You can put other variables and schemes to decide what would be the worst case scenario. In sum, do not act on a choice that has risks greater than you can actually bear (Yanurzha, 2018).
Dew, Nicolas., & Saras, Sarasvathy. (2009). The Affordable Loss Principle. Darden Case No. UVA-ENT-0075
