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Cost-Benefit Analysis—100 Mental Models #005 👽
How Alexander The Great made decisions.
A cost-benefit analysis is weighing the expected costs, against the expected benefits — to determine the best course of action.
Cost-benefit Analysis Example:
Alexander the Great and his army of 31,000 Macedonians stood against a Persian army over double the size in the Battle of Gaugamela. If Alexander lost the battle, he wouldn’t only lose his army. He would be killed. But if he won he would conquer the largest empire in the world. The cost was death, the benefit was becoming the most powerful man in the world.
Alexander determined the best course of action was to fight. He won the battle and became one of history’s greatest generals.
“My way is to divide half a sheet of paper by a line into two columns; writing over the one Pro and over the other Con. Then during three or four days’ consideration, I put down under the different heads short hints of the different motives, that at different time occur to me, for or against the measure. When I have thus got them altogether in one view, I endeavor to estimate their respective weights; and where I find two, one on each side, that seem equal, I strike them both out. If I judge some two reasons con equal to some three reasons pro, I strike out five; and thus proceeding, I find where the balance lies; and if after a day or two of further consideration, nothing new that is of importance occurs on either side, I come to a determination accordingly.” — Benjamin Franklin
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