Use the 37% Rule to Make Better Decisions

Use the 37% Rule to Make Better Decisions
Photo: StanislavSukhin, Shutterstock

When it comes to making decisions, are you the kind of person who immediately knows what they want, quickly decides, and rarely second guesses your choice? Or are you more of the “go to the bottomless pits of the internet to research every available option before spiraling into analysis paralysis despair” kind of decision-maker?

If you’re the former, please accept my sincere congratulations. You’re either exceedingly self-assured and zen, or exceedingly disciplined; either way, you’re blessed. For those of us who are inclined to spend entire days crafting meticulous pros and cons lists, before doubting and ditching said lists and starting all over again, there’s the fascinating and efficient 37% rule.

What is the 37% rule?

The 37% rule comes from optimal stopping theory in mathematics, which determines the optimal time to take a particular action in order to maximise reward and minimise cost (aka, the best time to stop seeking more options and pull the trigger). According to mathematicians, that point is right after you’ve seen or explored the first 37% of your options.

Of course, you need to come up with your total universe first, to calculate what 37% of your options will be. You can do that either by setting a maximum cap or a time-based deadline.

For example: If you’re car shopping, and decide you’d like to see 10 cars before making a decision, you should plan to see the first 3-4 with zero intention of buying them. After exploring those, your exploratory period has reached a point of diminishing returns, and the next car that is better than those initial three is the keeper.

Alternately, you can set a time period for your search, as author and programmer Brian Christian describes in his book Algorithms to Live By: The Computer Science of Human Decisions:

“If you want the best odds of getting the best apartment, spend 37% of your apartment hunt (eleven days, if you’ve given yourself a month for the search) noncommittally exploring options. Leave the checkbook at home; you’re just calibrating. But after that point, be prepared to immediately commit — deposit and all — to the very first place you see that beats whatever you’ve already seen. This is not merely an intuitively satisfying compromise between looking and leaping. It is the provably optimal solution.”

This rule can be applied to decisions of any nature — from dating or choosing a vacation spot, to purchasing a home and hiring a secretary (or any other job candidate). According to mathematicians, following this rule will save you from getting unnecessarily mired in information gathering and data analysis, get you into action, and maximise your probability of success.

Limitations of the 37% rule

Of course, when it comes to large financial decisions and matters of the heart, this rule doesn’t account for feelings, “gut instincts,” instant chemistry, and the power of recommendation. (E.g., when there is a very attractive, hilarious person sitting across from your very single self who was vetted and suggested by a close friend, even if they are the first date you’ve gone on in a year.)

While it won’t apply to every situation, and you shouldn’t discard what are clearly superior options simply because of a mathematical theory, if you have a tendency to make hasty but regrettable decisions, or spend too long investigating all your options, it’s a helpful rule of thumb. The next time you’re faced with competing choices, remember: Roughly the first third of your decision-making process should be information gathering, after which time, selecting the next great option you encounter is optimal.

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