Principles of Individual Decision-making Essay

DateIn life, we have to make a conclusiveness just ab come out everything that we do. These endings affect our daily lives and they sometimes they affect the lives of those nearly us. When making these ends there are make factors that go into making a final sensation. In economics there are four principles that progeny how a someone makes a last (Mankiw, 2007) People face trade-offs. The terms of something is what you give up to germinate it. Rational people think at the margin. People respond to incentives.These four principles play an valuable role in economics. This paper impart define each individual principle and and and so give the reader an insight on a person-to-person purpose of the author victimisation the aforementioned principles.Trade-offsMaking a trade-off is basically, choosing one thing over a nonher. A classic Italian quote referring to a trade-off is you dropt have a full fuddle bottle and a drunk wife. As modern applied science advances, one co uld argue that society has traded-off battery life in private electronics for a smaller size and weight of the individual guile.The terms is What You allow UpAfter you have looked at what is being traded-off, then you gouge determine the true value of your decision by what you are adult up for it. As in the previous example of personal electronics, natural endowment up battery life has a serious downside in that the personal electronic device will have to be charged much often, or it will be wired to a wall turn the device is in use and charging. Here the cost can be a great one to a person that isconstantly on the go.Rational People Think at the MarginAs Mankiw (2007) pointed out Economists normally assume that people are quick-scented (p 6). Being rational means that an individual will do all that they can to come across their goal with all that they have for sale to them. A rational person thinking at the margin or on the edge will be able to make decisions that allow them to achive their goal without boastful up to much in overall cost. Going back to the personal electronic device, an individual could choose to go with the smaller and more than lightweight device because of its portability, that theyll bring along a portable charging device excessively, or use the product more sparingly to make the most of the available battery power.People Respond to IncentivesAn incentive can be change to something positive manage a benefit or something negative like a consequence. Incentives can be a large part of an individuals decision making process. The incentive that an individual would most likely respond to when choosing the in the altogether personal electronic device would be that they are carrying around slight weight, therefore making them more mobile. The consequence side that would affect the decision would be rooted in the fact they will non be able to use the device as much as they would like.My individualized DecisionRecently I took up the hobby of cycling and agonistical road racing. A lot of thought went into my decision on whether to get involved or not. I will layout how I can to my decision using the four principles of decision-making.Trade-offsAs I have aged I have picked up many hobbies. I was balancing my time mingled with my hobbies, my family, and my job. My numerates of hobbies included, but were not limited to, golfing, running, playing video games, and building present cars. I have always had bicycling as part of these hobbies, but it was only an occasional one. When I decided to actively cycle more, I had todecide what to give up in exchange. First on that list of trade-offs were all of my hobbies. Second was family time. Cycling can take up hours of a day. I usually average 2 hours a day of ride time during the week and up to 4 hours a day on the weekends. I had a lot to think about in my decision.The Cost of what I gave upGiving up my hobbies for cycling was not a cost at all to me because I took that time I was using for the hobbies and foc employ it towards cycling. The cost of lost family time is more significant and placed more of an impact on my final decision. Being in the naval forces and having five to eight month deployments can be hard on a family, so all time spent at stand is very valuable.Rationally thinking at the MarginFortunately I was wasting a lot of time on my other hobbies that it allowed me more time then what I was spending on the bike. I used this spare time with the family at home. Also, I took into account that as my daughters age, I can get them onto bicycles and spend time with them when I am doing my averse recovery rides which play a large part in my training.IncentivesFinally, I took in to account the incentives of cycling to make the final decision. The most important incentive was setting an example to those around me. My children will see that I done just come home after work and do nothing constructive and that I am out there ar duous to improve myself . As for those I work with, they see that I can balance Work, Home and time for staying fit, and hopefully they will follow in my example. Another incentive was the aspect of fitness and personal health. No long-life can there be the overweight chief that stresses the buttons of his uniform. In instantlys Navy, a sailor is constantly representing his country, Navy, and ship. If a sailor does not fit in his uniform properly then he is not representing the Navy very well, and he could be hazard to the ship in an emergency situation if he is not physically fit.ConclusionIn an economy there are four principles that are vital to the decision making process of how it will distributes its resources. The first is Trade-offs, giving up one thing for another. Then the determination of the cost of what you are giving up to get to your goal. Third, is the the thought that rational people think at the margin, meaning one will take advantage of all opportunities to exec ute ones goals. Finally, the principle that people respond to incentives, assists in find out the quantity or price of a certain resource. These principles are also applied in individual decision-making, and the results can affect more then just an individual but an entire economy.ReferencesMankiw, N. G. (2007). Principles of Economics. Mason, Ohio Cengage Learning.