37% Rule — Why ‘Optimal Stopping’ is one of the best way to avoid further bad decisions in life?

  • How many people should you date before deciding to ‘settle down’ and get married?
  • How many interviewee should we look at before deciding on “The One”?
  • How many flats should I look upon before saying “Yes” to one of the offers?
  • How many hotels should I look before deciding on the one to settle into?
  • How many internships should you do before deciding on a job offer?
  • How many careers should you try out before you figure out which your favourite is?
  • Spend too long probing your options and you fall prey to analysis paralysis and let promising opportunities go by.(Overly Exploratory)
  • Close out the process too quickly and you risk regretting options you never considered.(Overly Exploitative)
37% Rule
Image by Author — 37% Rule

MAIN IDEA

TECHNICAL (1/e Stopping Rule)

Image copied from Wikipedia

PSYCHOLOGICAL TEST on Exploit or Explore Conundrum

  • If you are visiting a city you know vaguely well, will you go to a restaurant you know is nice, or will you try somewhere new?
  • If I tell you a gambling machine has a payout of $50, will you stay and play or explore to see if others have a bigger payout?
  • When you’re playing a game, do you tend to stick to the same tactics or mix it up each time?

USE CASES

1) SECRETARY PROBLEM OR HIRING PROBLEM

Secretary Problem
Image by Author — Secretary Problem
Secretary Problem — Sampling
Image by Author — Secretary Problem — Sampling

2) MARRIAGE PROBLEM

3) REAL ESTATE PROBLEM

CONCLUSION

  • When trying to pick the best among many options, how many samples should you try before you commit? This is known as the optimal stopping problem.
  • Mathematicians tell us that, to maximize the chances of the best outcome, we ought to ditch the first 37% of any options.
  • In psychology, people tend to either “explore” or “exploit” more. But, sadly for us, relationships are a bit messier than probability would have it.

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I write about Notions built from 3Ms : Maxim, Mental Model & Metaphor related to Finance — Health — Philosophy — Psychology — Technology. www.quantumthinker.io

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Quantum Thinker

Quantum Thinker

I write about Notions built from 3Ms : Maxim, Mental Model & Metaphor related to Finance — Health — Philosophy — Psychology — Technology. www.quantumthinker.io

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