Concept · Foundations

Opportunity Cost

The value of the best alternative you give up when you choose one option over another.

Why it matters

Every decision has an opportunity cost, and ignoring it leads people to accept options that look good in isolation but are dominated by alternatives they failed to consider.

Where this shows up

Units and lessons using this concept

Following the links will take you to the page where this term is introduced in context.

Units (1)

Decision Theory: Choosing Under UncertaintyStudents learn the logic of rational decision making under risk and uncertainty, including expected value, utility, decision matrices, do…

Lessons (2)

Capstone: Decisions Under Real UncertaintyDecision Theory: Choosing Under Uncertainty Sunk Costs, Opportunity Costs, and FramingDecision Theory: Choosing Under Uncertainty

Other concepts in Foundations

A, E, I, O Propositions Accessibility Relation Argument Atomic Statement Base Rate Bayes Factor Calibration Cardinality Cartesian Product Categorical Proposition Categorical Syllogism Circularity