to strike while the iron is hot

Getting older has its advantages, at least for those myopic people like me. When my headache got worse with the new glasses, I started to doubt whether the new glasses were all right for me and went to consult another optician. To my great surprise, I was told by the optometrician, after a whole procedure of measuring, that my vision has actually improved rather than deteriorated. ’It is a normal phenomenon that your vision can improve when you grow older.’, the grey-haired optometrician said that to me gently, as if the words ‘grow older’  would hurt me.

With hindsight, I should have waited with my previous decision to purchase the new pair of glasses with much higher power. But at that time I was so happy to discover the cause for my headache that I completely forgot to apply my usual ‘real-options’ way of thinking. As I wrote in my previous blog, decisions like purchasing new glasses are certainly not  ’now or never’, have sunk costs, and have uncertain outcomes–a textbook example of real options.

But I was in a very different mindset at the time when I visited the first optician. It was the day that I received the e-mail from Brian, who read my blog and shared with me his new thought on real options:  There are lots of decisions in life that are ‘now or never’, i.e., for which the option of waiting is not real. Such as the decision to learn to ski…if you keep postponing it, someday you will be too old to do that. The same can apply in business- the niche market is there but if you are not the first to jump in, the opportunity will be lost. 

“It is of course silly to have regrets about what might have been”, wrote Brian, ”But the young should be aware of the maxim to ‘strike while the iron is hot’ “.

Well, I guess I must have taken the maxim a bit too far and struck the wrong iron…

a luta continua

After dozens of visits to people who make a living on other people’s illness and receiving not much more comfort than ‘you don’t have brain tumor’, I accidentally found out that one important cause of my persistent headache was probably my deteriorated eyesight. The power of my old glasses turned out to be far too low for my eyes now. As a result, my eye muscles had to work really hard to see well. The concomitant ‘near point stress’ on the eyes of someone who reads and computers most of the time like me had probably caused the fatigue of my eyes and my headache.  

With hindsight, it now seems quite obvious and logical now that I should have started by visiting the optican when the complaints started. But I guess the right choice does not always present itself in the first place. Anyway, I am more than happy to know that my headache was not only ’metaphysical’ and I can go back to the ‘battle field’ soon.

But my mind is already back to topics like risks, agroclusters, agroparks, antibiotics, and generating random thoughts about industrial ecology: It is true that synergy exists in symbiotic relationships, but it is hard to establish symbiotic relationships for synergy.

Real options, the value of waiting, and procrastination

“So tell me, what is so special about this Real Options?”

Each time when I hear people talking about real options, I would hear Brian Hardaker questioning me again in his Australian English.  That was about 8 years ago when we met to discuss my PhD proposal on ‘Discovering Real options in controlling foot-and-mouth diseases’. At that time, the Real Options approach promised to become the new paradigm of decision-making under uncertainty. Brian was intrigued by the ‘hype’, but clearly not convinced of the added-value of real options. In fact, he was quite skeptical about the whole Real Options thing. In his opinion, as I interpreted,  the real options approach was not much more than dynamic programming with the option of waiting included when it comes to dynamic decision-making.

After years of muddling through in the worlds of real options and epidemic diseases, I eventually came to the same conclusion. It’s tough to admit, but the professor was right, the real options approach was indeed not that novel, at least, not qualifying as a new paradigm. But so are many other ‘new’ theories and ‘new’ insights:  they merely offer new vantage points or new angles to look at the same old thing.  The success of real options at that time could probably be attributed to the fact that, while not many people were familiar with dynamic programming, many people did trade in options or knew about financial options. And most people intuitively value options more than obligations and tend to procrastinate if decisions involve high sunk costs and high uncertainty.

My close friends often sneer at me when I talk about the science of decision-making as part of my profession. They have good reasons: For someone who has spent more than 15 years hesitating whether or not to get a divorce, it’s hard to imagine that she knows how to make good decisions. 

Well,  I have had hard time with my marriage and have kept people waiting for the resolution. But in my defence I would argue that decision-making is seldom a now-or-never thing, and I have just been waiting for the right moment. Viewed from this perspective, I am probably a born ‘Real Option-ist’:  someone who recognizes the possibility of divorcing as an option, but not an obligation, to change my life for something potentially better than remaining in a marriage that sucks most of the time.  I have kept postponing the decision because I realize that, once I actually ’exercise’ this option, there would be irreversible costs, both financially and emotionally, which might be avoided if I postpone the decision.

Of course postponing the decision also has costs, and it can cost dearly. Even when all the mental energy that was consumed can be ignored, one should always question whether the benefits of waiting can offset the costs. When this is not the case, it is high time to realize that holding real options is no excuse for indulging in procrastination.