Margin of Safety
Before driving across this bridge we want to know the weight of our vehicle is well beneath the 3 ton weight limit. We want a margin of safety. Likewise, Warren Buffet wouldn’t buy a business valued at $54 million for $50 million because it doesn’t provide a sufficient margin of safety. A huge margin of safety protects us from errors in our judgment, bad luck, or extreme volatility in a complex, unpredictable and rapidly changing world.
Margin of safety simply acts as a buffer for clouded judgments and bad decisions. It protects us both from ourselves and from whatever unforeseen events the world may throw at us in the unpredictable future.
Social Decision Making
Much of our decisions are weighted relative to a social group. For example, if we buy an outfit for a wedding we choose based on what is fashionable. If not everyone would wear baggy comfortable, cheap, no brand name clothes. Likewise, before writing an article, or posting on social media some thought goes into what our friend base thinks or likes. We wouldn’t want to disappoint!
Margin of Safety + Social Decision Making =
Margin of Psychological Safety in Social Decision-Making
If we make a decision that departs from social consensus it violates our margin of psychological safety. The further the departure, the increase in psychological distress which requires:
- Social Avoidance: Avoid people or ignore information about the social reference group.
- Psychological Adjustment: Align our decisions with the consensus (adjust to the norm).
The Margin in Psychological Safety Relies on:
- Anticipating how the outcome of our decision will be perceived by our social groups.
- Sufficiently caring about what our social groups think.
For example, we may want to eat healthy at the upcoming super bowl party. However, choosing to eat a salad while all of our friends eat pizza may disrupt our margin psychological of safety. Will my friends make fun of me if I eat a salad? Maybe they will not care? If they don’t care, how long can I get away with eating differently without losing friends? Maybe if I drink beer with my salad they will not see me as weird?
Our decisions not only involve our preferences but also anticipations of people involved in our social context. Therefore, intertemporal preferences require maintaining an appreciable margin of psychology safety. We do this by dynamically trading off our goals and preferences across different timescales (immediate and distal), relative to our reference groups in a specific context.
Whether its shopping, sharing posts, or eating – we typically weigh our decisions relative to our preferences/goals and relevant social groups (friends, teammates, or co-workers) to maintain a margin of psychological safety. If we are not creating a large enough (social) psychological margin of safety – we create discourse in our social life or personal psychology.
Related Concepts or Theories
- Theory of Mind, Anticipation, Herd Behavior, Anchoring & Adjustment, Social Groups, Information Avoidance, Inertia, Optimal Distinctiveness, Margin of Safety, Risk & Uncertainty, Social Decision Making, Value, Categorization, Memory, Intertemporal choice, Construal Level.