I should have canceled the Uber ride after the driver’s first question.
Driver: Are there any police near you?
Me: Yes.
Driver: How many?
Me: Two.
Driver: If you walk to entrance 7 will they see you?
Me: Yes.
Driver: OK. I’ll drive by slowly. If I stop, you’ll need to get in very quickly.
And so went my second failed Uber ride from the Istanbul airport. We scrambled for a Plan B, descending four levels to a long queue of taxis. None of the drivers seemed confident on the cost to our destination–a small fishing village on the European side of the Bosporus. “We’ll use the taxi method,” said the driver at the front of the queue. I assumed this meant metering. Nope.
For Plan C, I walked a few yards over to the private cars for hire. The first private driver quoted 1,900 Turkish Lira, twice the Uber price I had expected to pay. Nope.
And so we went with Plan D–the Metro. If you’ve never been to Istanbul, IST is the major international airport 20+ miles northwest of the city. The Metro was the cheapest and most predictable option, and after 90 minutes of standing in a crowded subway car we arrived at the stop nearest our Airbnb. It got us to our ultimate destination in the most uninspiring way possible.
Some quick context: I’m on holiday with my family in Istanbul, Turkey, one of the world’s great cities. We have only three days to scratch the surface of what Istanbul offers. One of the top recommended activities is a sunset Bosporus cruise. The problem is that a full Bosporus cruise would consume an evening and crowd out other activities. My hyper-efficient idea was to take a 40 minute Uber from the airport to a small fishing village where we would hop on a public ferry and take it down the Bosporus to Old Istanbul, near our Airbnb. Transportation from the airport? Check. Bosporus cruise? Check. Two birds, one very efficient stone. And all at a fraction of the cost of a private cruise. I had a brilliant plan. Then reality punched me in the face.
I tell this story because it nicely illustrates some of the cognitive biases and emotional challenges we face when making decisions in the face of uncertainty. There’s the Dunning-Kruger effect on full display. I thought I knew everything I needed to know about transportation from IST after watching a few YouTube videos. Wrong. Things had clearly changed. Second, my loss aversion and unwillingness to use a metered taxi was misplaced. I knew the route, the time it would take, and the distance. I could follow along on Google Maps. Finally, my balk at the private car’s price was clearly an example of anchoring bias. I had a price in mind from my Uber research, but the private car offered a better experience, it was a set price, and the extra $30 would still make this option far cheaper than a private cruise alternative.
Saddled with these cognitive biases I ended up going with the safest, most predictable, but least enjoyable option, foregoing a lovely, cost-efficient cruise down the Bosporus. I chose the equivalent of the money market fund–the lowest risk, lowest reward option. (This is not to say that money market funds are always a bad option in our portfolios!)
This little anecdote illustrates where mistakes regularly creep into our decision-making. We often have a good plan, but life has a way of throwing curve balls that we’re not expecting. It’s when reality deviates from our envisioned future that we become most susceptible to making poor decisions–a market drawdown, an unexpected layoff, an unanticipated major home expense. Because of this, we’re often in a suboptimal state of mind when a decision is needed.
Here are a few things that can help us make better decisions:
- Identify the challenging factors and mitigate them. It’s important to first name the forces and emotions weighing on you. I was hot and frustrated. My family was hangry. My phone’s battery was at 27% and draining fast. All of those forces could have been mitigated. Once you’re aware of them, you can find ways to adapt and keep them from steering your decision in the wrong direction.
- Buy some time and feel your way through the emotions. Decisions are made at the place where our logic meets our emotions. In balance, they’re both good. But when they’re out of balance we make decisions we regret. Not rushing into a decision while our emotions are running the show is one of the best ways to ensure better outcomes.
- Talk to at least one outsider, ideally an expert. I should have taken the time to talk to a local about my predicament and get a disinterested, informed, third party perspective. Applying this to personal financial decisions, this is one of the value adds you’ll get from a good financial planner. A good planner will listen and ask questions that will help you identify logic gaps and blind spots in your thinking. If you find yourself facing a difficult decision, I encourage you to seek out an expert to help guide you through the decision BEFORE it’s made.
