Improve Your Decision-Making with These 10 Cognitive Razors

The average adult makes about 35,000 conscious decisions each day.

Given this sheer volume of choice, how do we ensure we’re making the right decisions, day in and day out, without becoming exhausted?

Using insights from investor and thought leader Sahil Bloom, this graphic shares 10 cognitive razors, or rules of thumb, that can help you simplify your decision-making.

We’ve organized Bloom’s favorite cognitive razors into three overarching categories, which we dive into in further detail below.

Location, Location, Location

The first theme is location, and the importance of being at the right place at the right time.

The Luck Razor falls into this category because it highlights the importance of putting yourself out there. According to the Luck Razor, when choosing between two paths, pick the one with the largest “luck surface area,” or the path that offers you the most opportunity to get lucky.

This is because when you’re networking, meeting people, and building new relationships, you’re much more likely to stumble upon an opportunity than if you were sitting on your couch, not taking action.

The Rooms Razor follows a similar theme because it emphasizes the importance of your surroundings. It stresses that, if you have a choice between two rooms to walk into, choose the one where you’re most likely to be the dumbest person in the room.

While it’s a bit of an uncomfortable situation, it provides a greater opportunity for growth, as long as you check your ego at the door and listen to what others have to say.

Lastly, the Arena Razor reminds us that when we want something, we need to take the necessary steps to make it happen.

For instance, if you want to become a social media influencer, you need to start creating content and posting it online. It’s not easy to put yourself out there and take action, but if you want to play the game, you need to be in the arena.

The Power of Positive Thinking

The next theme is the power of mindset and positive thinking. This relates to how you view your life, the people you choose to surround yourself with, and how you interpret the actions and opinions of others.

According to the Gratitude Razor, when in doubt, don’t hesitate to show your gratitude to people who have supported you, or given you advice or opportunities.

Research studies have shown that expressing gratitude and giving thanks can be correlated with greater happiness, improved health, and stronger more meaningful relationships. So make sure to say thank you regularly, and tell your loved ones how much you appreciate their support.

It’s not just your mindset that’s important, though. The Optimist Razor recommends surrounding yourself with optimists, rather than pessimists. Pessimists may point out everything that could go wrong in a scenario, which might discourage you to break out of your comfort zone.

Optimism, on the other hand, will emphasize everything that could go right—and may even help you problem solve if you encounter problems along the way.

Keep Decision-Making Simple, Silly

The last one is quite simple, really: don’t overcomplicate things.

Occam’s Razor, which is named after the 14th-century scholar Franciscan friar William of Ockham, is generally interpreted as the following: when faced with a decision between two competing theories that generate the same outcome, the simplest theory is often the best one.

As Bloom says in this blog post, “simple assumptions [over] complex assumptions. If you have to believe a complex, intertwined series of assumptions in order to reach one specific conclusion, always ask whether there is a simple alternative assumption that fits.”

The ability to make things simple is also a good indicator of how deeply you understand something. According to the Feynman Razor, if you can’t explain a concept simply, then you don’t really understand it. So, if someone uses a ton of jargon or complexity to explain something, they could be masking a lack of deeper knowledge on the topic.

Editor’s note: For more information on cognitive razors and simplifying your decision-making, check out Sahil Bloom’s newsletter, or listen to his podcast episode where he talks about the most powerful razors he’s discovered so far in life.

Brand Loyalty is Declining for Most Luxury Automakers

New research conducted by S&P Global Mobility has found that brand loyalty—measured as the percentage of buyers that go back to the same brand for their next vehicle—is falling across the luxury segment.

In this infographic, we’ve visualized the results of this research, which spans from January 2020 to April 2022.

Brand Loyalty Losers

The following brands have all experienced a drop in brand loyalty over the time period.

For additional context, we’ve also included each brand’s score in the J.D. Power 2022 Initial Quality Study. This is measured based on the number of problems experienced per 100 vehicles (PP100) in the first 90 days of ownership.

Land Rover experienced the biggest drop in loyalty, despite a better than average PP100 rating. One potential reason is timing⁠—the brand’s premier model, the Range Rover, has been in its fourth generation since 2012. The SUV has become relatively dated, though a new fifth generation was recently revealed for the 2022 model year.

Two Volkswagen Group brands, Audi and Porsche, also fared poorly in terms of loyalty. This is somewhat surprising, as both brands offer a portfolio of both gasoline and electric models. Many competitors, such as Acura, Lexus, and Maserati, have yet to release an EV.

Brand Loyalty Winners

Three brands have managed to buck the trend, as shown below.

We can draw parallels between Tesla and Apple, in that both have incredibly loyal followers.

For instance, between March 2021 to April 2022, 62% of buyers/households who returned to market and previously owned a Model 3 purchased a new Tesla. That’s an impressive statistic, especially when we consider Tesla’s history of build quality issues.

Maserati appears to be in the same boat. The Italian automaker has strengthened its brand loyalty by 4.3 percentage points, despite having the luxury segment’s worst PP100. Perhaps build quality matters less than we think.

Another Factor to Consider

Ongoing supply chain issues could also be contributing to wide-spread declines in loyalty. Rather than waiting several months (or in the case of EVs, years), buyers may switch to a different brand that has cars in stock.

We are still monitoring it week to week, but up to now basically worldwide, we had no issues running production.
– Joerg Burzer, Mercedes-Benz

Many automakers have reported that their supply issues are diminishing, though new economic challenges have risen. For example, surging inflation has pushed the price of a new car to record highs. Combined with rising interest rates (cost of borrowing), this could negatively impact the demand for new cars.