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Avoid Hedging Under These 3 Circumstances

When making an important decision, especially when influences outside your control affect the outcome, it’s useful to hedge—to take an action to mitigate a bad outcome.

You can hedge by buying insurance, keeping backup options open or having an escape clause.

Hedging provides insurance against bad outcomes, whether due to a poor decision-making process, lack of information or environmental influences beyond our control.

But hedging has a cost.

Avoid hedging when:

  1. The hedge affects the outcome of your choice
    Lack of commitment sends mixed messages and can cause an otherwise good choice to fail. Keeping an old flame alive can ruin a marriage, while having employees work on two projects that compete with each other can cause them to lose focus, put in less effort to overcome obstacles and feel like they’re doing extra work for nothing.
  2. The cost of hedging outweighs the chance of failure or its consequences
    If there’s a 10% chance of being wrong, don’t pay 50% extra to hedge that decision unless that failure has major consequences. Likewise, a high chance of failure with small consequences rarely makes sense to hedge.
  3. You’ll rationalize your choice anyway
    If you don’t have a clear definition of success, or the decision involves personal preferences, your subconscious will justify your choice. Our brains often adjust our preferences to match our decisions rather than the other way around. In these cases, hedging can actually make you more¬†dissatisfied¬†with your choice.

Of course, these are not fixed rules. Sometimes you do want to hedge.

Hedging can be a useful strategy to handle environmental circumstances that can take a well-made decision and cause it to fail. But keep in mind the pitfalls of hedging too.

What decisions have you hedged that you wish you didn’t?

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