A-Z Popular Blog Decision Making Search »
Decision Making
Decision Making

What is an Opportunity Cost?

 , October 16, 2015 updated on December 22, 2016
An opportunity cost is the value of your best alternative to a decision. It is a concept that stems from economic theory that can be used to model decisions. In economics it is used to model the basic relationship between scarcity and choice.
Every business or individual has limited resources. As such, each decision commits resources that could have been used to do something else. For example, if you choose to work late to finish a document, your opportunity cost may be a few hours playing with your kids.
Overview: Opportunity Cost
FunctionDecision Making
DefinitionWhat you give up by making a decision or committing resources to a strategy.
ExampleSpending $5 on an ice cream cone means that you have $5 less to spend on other things such as toys or amusement park rides.
ValueIn any decision, it's helpful to understand both what you're gaining by committing to a strategy and what you're giving up in terms of missed opportunities.
Related TechniquesDecision Modelling

Decision Making

This is the complete list of articles we have written about decision making.
A/B Testing
Abilene Paradox
Abstract Concept
Analysis Paralysis
Analytic Reasoning
Benefit Of Doubt
Boil The Frog
Choice Architecture
Cold Logic
Collective Intelligence
Convergent Thinking
Critical Thinking
Decision Analysis
Decision Authority
Decision Balance
Decision Costs
Decision Fatigue
Decision Framing
Decision Mapping
Decision Quality
Decision Rationale
Decision Theory
Decision Tree
Devil's Advocate
Disagree And Commit
Divergent Thinking
Emotional Intelligence
Failure Of Imagination
Group Decisions
Keep It Simple
Maximax Criterion
Minimax Criterion
Non Decision
Normative Model
Opportunity Cost
Paradox Of Choice
Pareto Analysis
Predictive Analytics
Preserving Ambiguity
Reverse Brainstorming
Sanity Check
Strategic Dominance
Thought Experiment
Visual Analytics
Visual Thinking
More ...
If you enjoyed this page, please consider bookmarking Simplicable.

Decision Making

A list of decision making techniques.

Abilene Paradox

The observation that groups may make collective decisions that are viewed as wrong or irrational by each individual member of the group.

Decision Making Process

A complete guide to the decision making process.

Rational Thought

Rational thought is often somewhat logical but includes factors such as emotion, imagination, culture, language and social conventions.


The common types of uncertainty in decision making and strategy.

Information Costs

A definition of information costs with examples.

Reverse Brainstorming

A definition of reverse brainstorming with examples.

Decision Fatigue

The definition of decision fatigue with examples.

Devils Advocate

Taking a position that you do not necessarily agree with for the purposes of argument.

Paradox Of Choice

The definition of paradox of choice with examples.

Problem Solving

An overview of problem solving with examples.

Thought Processes

A list of thinking approaches and types.


A definition of workaround with examples.

Creative Thinking

A list of common creative thinking techniques.


A list of common types of problems.

Analysis Paralysis

The definition of analysis paralysis with examples.

Arrow Of Time

The definition of the arrow of time with examples.

Business Problems

An overview of common business problems.

Decision Framing

The definition of decision framing with examples.


The common types of research.
The most popular articles on Simplicable in the past day.

New Articles

Recent posts or updates on Simplicable.
Site Map