thinking-opportunity-cost

# Opportunity Cost Core rule: every commitment displaces its best alternative. Report both that forgone value and the net value delta; decide on the delta, not the chosen path alone. ## When to Use - Allocating scarce time, headcount, budget, or attention across competing options - Feature prioritization, build-vs-buy, tech-debt vs product work - Saying yes to a large commitment that displaces other work - Comparing a bold path against polishing the status quo when windows may close ## When NOT to Use - Trivial or cheaply reversible choices where analysis costs more than the resource - No real alternative use (resource is idle, earmarked, or non-fungible) - Mandatory work (compliance, security fix, hard dependency) with no optional alternative - Inventing speculative alternatives only to look rigorous when the next-best is clearly worse ## Procedure 1. **State the commitment.** Name the choice, the scarce resource units (eng-weeks, dollars, calendar), and the decision horizon. 2. **List real alternatives, including do-nothing.** At least: proposed option, next-best productive use of the same resources, and status quo / wait. Drop fantasy options with no owner or feasibility. 3. **Value each path.** For each alternative, estimate direct value, strategic value, risk, and time-to-value in the same units. Prefer rough comparable magnitudes over fake precision. 4. **Compute best forgone value and value delta.** Identify the single best non-chosen alternative (may be do-nothing). `best_forgone_value` = its estimated value. `value_delta` = `chosen_value − best_forgone_value` (same units). True cost of choosing = direct cost of the choice + `best_forgone_value`. Prefer the option with the superior (positive) value delta after risk; a large positive chosen value is not enough if the forgone alternative is larger. 5. **Future tradeoff / permanent forgone options.** For serious alternatives (including the bold path): mark temporary recoverable costs vs permanent losses (window closes, lock-in, no re-entry). Prefer avoiding the greater permanent loss when acting downside is recoverable and non-catastrophic—even if near-term value_delta is slightly negative. Do not invent permanence for speculative upside without evidence. 6. **Strongest countercase and decide.** Steel the case that the best alternative or its value is misidentified (sunk-cost anchoring, status-quo undervalued, or a "free" option that still burns time). Recompute `value_delta` under that challenge. Then choose: proceed if delta stays favorable (or permanent-loss rule applies), else switch, wait, or split. Stop when ranking is stable. ## Output ```text Choice: … Resources committed: … Alternatives: A (proposed): value … risk … B (next-best): value … risk … C (do-nothing / wait): value … risk … Best forgone alternative: … Best forgone value: … Value delta (chosen_value − best_forgone_value): … Permanent vs temporary losses: … Decision: proceed | switch | wait | split — because value_delta … (and permanent-loss rule if used) Countercase checked: … ``` ## Verification - **Falsify:** If the analysis never names a concrete next-best use of the same resources, or reports only one number labeled both "opportunity cost" and "delta," it is incomplete—add B, then report `best_forgone_value` and `value_delta` separately. - **Stop:** When one best forgone alternative and a signed value delta determine the choice, stop enumerating weaker options. - **Over-application guard:** Do not run full accounting on mandatory or trivial work. Ignore sunk costs; revalue only from current state forward.