When there is high uncertainty, there is anxiety in making a choice. Who wants to mkae a bad choice? The issue is then trying to reduce the level of anxiety to allow for better decision-making. Some simple rules can help reduce anxiety.
Minimize the options - If there are fewer choices, it is easier to make a decision. One way to reduce the options is to categorize the choices. Allow for one option within a grouping. For example, if you are worried about an energy shock, break down the choice between risk-on and risk-off, and within each category, allow for two options.
Stick to what you know - If there is an option that is not well known to you, then drop it from the choice list. Active decision-making may not be the time to learn about new options. It can be an expensive education.
Do not regret wrong decisions - The anxiety of choice is based on the regret from making the wrong decision, so another simple way to reduce anxiety is to think about minimizing regret. What is the downside of making a wrong choice? It is important to remember that there are acts of commission, the actions we take, and acts of omission, the actions we don’t take, and regret is greatest for commission. Take the time to ensure that your actions are well-grounded to reduce regret.
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