These terms come up throughout PreRipple's guides and inside the product itself. None of them require a background in economics or statistics — they are simply names for things people already do when they think carefully about a choice.
- Scenario planning
Comparing several plausible versions of the future instead of forecasting one. Each scenario spells out its assumptions, so you can see which outcomes depend on what.
Example: Instead of asking whether freelancing will work, you describe a slow-start year, a steady year and a strong year, and check whether you survive the slow one.
- Opportunity cost
The value of the best alternative you give up by choosing something. Every yes is also a no.
Example: Taking a role with a 10% raise but no learning may cost more over five years than a lateral move that builds a scarce skill.
- Reversible decision
A choice you can undo at a cost you would willingly pay. Reversible decisions deserve speed rather than long analysis.
Example: Renting in a new city for six months before deciding whether to settle there.
- Irreversible decision
A choice that cannot be undone, or whose reversal costs more than you can absorb. These earn extra analysis and a written exit plan.
Example: Selling a home in a market where transaction costs exceed a year of savings.
- Decision paralysis
Being unable to choose because the options feel close, the stakes feel high, or the information feels incomplete. It is usually a framing problem, not a willpower problem.
Example: Two months of re-reading the same job offer. Naming the one unknown that would settle it converts the stall into a task.
- Sunk cost
Money, time or effort already spent that cannot be recovered. Sunk costs should not influence what you do next, though they almost always do.
Example: Staying in a degree you no longer want because of three years already invested, rather than because of what the remaining year is worth.
- Trade-off
Accepting less of one thing to get more of another, because both cannot be maximised at once.
Example: A shorter commute for a higher rent; a higher salary for less autonomy.
- Uncertainty
Not knowing which outcome will occur. Some uncertainty can be reduced with information; some is irreducible and must be planned around instead.
Example: You can research a city's rents. You cannot know whether you will like it in year three.
- Risk
Exposure to an outcome that would harm you, described by how bad it is, how long it lasts, and how likely it feels.
Example: Six months without income is a risk; the size of your reserve determines how severe it is.
- Downside
The realistic worst plausible outcome of a choice, including how long it lasts and what recovery requires.
Example: Not 'the business fails', but 'nine months of lost income and a re-entry salary 10% lower'.
- Expected outcome
The unremarkable middle case — what usually happens when neither the good nor the bad scenario dominates. It is the case most worth planning for.
Example: The side business earns a modest supplement rather than replacing a salary or dying quietly.
- Assumption
A belief your plan depends on that has not been verified. Load-bearing assumptions should be tested before committing.
Example: 'Clients will pay this rate.' Testable with one paid pilot.
- Constraint
A fixed limit the decision must respect: money, health, visa status, caring duties, notice periods.
Example: A mortgage approval that lapses in 60 days sets the deadline whether you like it or not.
- Decision tree
A branching diagram of choices and their possible consequences, used to trace what follows from each option.
Example: Quit now, or stay six months then reassess — each branch leading to its own set of next choices.
- Sensitivity analysis
Changing one input at a time to see how much the outcome moves. It identifies which variables actually matter.
Example: If the plan survives a 20% revenue miss but not a two-month delay, timing is your critical variable.
- What-if analysis
Exploring how outcomes change under different conditions, without claiming to know which condition will occur.
Example: What if rates rise a point? What if only one income continues for a year?
- Decision support
Tools and methods that help a person structure and understand a decision. Decision support does not make the decision or predict the result.
Example: PreRipple is decision-support software: it organises scenarios, it does not forecast your life.
· Published by PreRipple, a product of Panzica Technologies Inc. · Educational information, not personalised professional advice. See our editorial policy.