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Every decision is a bet
A job offer
A job offer in a city you have never lived in is a bet. Will you like it there? Is the salary enough to justify the risk? What does it open up for advancement later? None of the answers is certain, so the choice rests on beliefs about how likely each outcome is.
Taking the job closes off every other option at once: staying put, moving anywhere else, and every future that would have followed. The new city leaves a whole set of possible futures open, from loving it to hating it to meeting the love of your life there. Choosing means estimating the probability of each and spending money, health, happiness, or time on the one that looks best.
Betting against yourself
Most of these bets are placed against other versions of yourself. The you who orders the chicken faces the you who orders the fish, and the you who takes the new job faces the you who stays.
How did betting give birth to probability theory?
In 1654 Blaise Pascal and Pierre de Fermat exchanged letters about how to fairly split the stakes of a gambling game that had been interrupted before it finished. The problem had been put to Pascal by a French gambler, the Chevalier de Mere. Their solution weighted each player's chance of winning by what was at stake, and it is often counted as the start of probability theory. Christiaan Huygens published the first printed book on the subject in 1657, titled On Reasoning in Games of Chance.
Why does every choice carry a hidden price?
Economists call the value of the best alternative given up the opportunity cost, a term credited to the Austrian economist Friedrich von Wieser in the early twentieth century. The idea says the true cost of a choice includes what the next-best option would have delivered, even when no money changes hands. An evening spent at a concert, for example, costs the other things that evening could have held. The term is now standard in introductory economics courses.
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