Name for a problem where one solution has a high known cost and the other has an unknown cost

There's this type of problem I occasionally encounter in many different parts of my life. In this problem, there are two strategies to success:

1. High, known cost
2. Unknown cost, potentially very low or very high

The interesting thing about this problem is that with strategy 2, you might continuously feel like success is just around the corner. Each time you weigh your options, #2 might seem like the better option but in the end you can waste a lot of time.

Here are some examples:

• You need to make money. You can work hard at a steady job or gamble (one might consider making a start-up like gambling).
• You just got a new appliance and you need to set it up. You can read the manual or you can try random keys and working through the menus using intuition.
• You're trying to find something in your house with little to no idea where it is. You could systematically go through every area of every room, or you could semi-randomly look in the most likely areas.
• You're stuck in traffic. Nobody is moving at all. The road's shut down but you don't know for how long. You could take a much longer alternate route, or you could wait for the road to reopen.

Is there a word for that? This must be some kind of b-school/game theory thing.

• I can't name your problem but the first solution is: get'er done and the second: a pig in a poke. Problem Solving Wiki was a good read but didn't get me anywhere. Mar 10, 2015 at 4:32
• You want to be rich: You could either spend years studying, and asking bank loans etc. to set up your own business, or you could steal. The first option is the long honest route, the second is a short-cut. But both routes involve taking risks. Mar 10, 2015 at 12:43
• Caught between the devil (high known cost) and the deep blue sea (unknown cost). Mar 11, 2015 at 0:41
• that's not it, Mari-Lou. it has nothing to do with a long honest route versus a short-cut. (note too that the first route you describe is extremely flakey and chancey, "setting up a business".) it's about an approach where (A) is difficult but well-understood versus (B) which is uncertain but COULD be easier/better. The phrase used to describe this in English is "the devil you know versus the devil you don't" Mar 11, 2015 at 0:41
• The really typically example is when you have a used car, which needs a fairly expensive repair. You can either repair it -- or give up on that car and get your next used car. In that exact situation people say "hmm, it's the devil you know, or the devil you don't". Mar 11, 2015 at 0:51

Dave, there is no single-word for what you describe.

However the exact phrase associated with this situation in English is "better the devil you know, than the devil you don't." or "the devil you know versus the devil you don't" or "it's the devil you know or the devil you don't" and other variations.

(So, just as you say, it's a very-bad-known-situation, and there's a alternative which unfortunately is unknown.)

Raider has provided certain relevant phrases ("Loss Aversion", the "Gambler's Fallacy") which may be useful (if you read up on them) in discussing the issue at hand. (When you mention "game theory", in general you may be thinking of "Prisoner's Dilemma", which you could read up on.)

But there's no such single word for when you are in a "it's the devil you know, or the devil you don't" situation.

Note Greg has importantly reminded us that another variation on this is "Caught between the devil and the deep blue sea" - outstanding, Greg.

• The phrase you offer is one that you might use to express your tendency to go with one option over another...but it doesn't really describe the situation itself. Mar 10, 2015 at 22:01
• @JoeBlow I'd toss some citations in there to improve your answer. The Free Dictionary has one. Nov 23, 2015 at 18:47
• Also to whoever downvoted, it's polite to explain why so the answer can be improved. You might think the problem is self-explanatory, but it may not be so for others. Nov 23, 2015 at 18:50

Your initial question is very clear once you add:

The interesting thing about this problem is that with strategy 2, you might continuously feel like success is just around the corner.

This is known as the Gambler's Fallacy. People depend to it when saying a series of good or bad events is due to end, because "the law of averages", as if nature is keeping track and will balance itself out here soon.

However, your different examples are a mixture of other ideas. And for the most part, you're circling around the idea of predicting Return on Investment. Basically, for most of these ideas, you're saying there's a known cost and reward of doing one action, but unknown cost or reward for the other.

The tendency of humans is to engage in Loss Aversion. This concept is fairly obvious: we prefer to not lose something rather than gain something. This tendency is very strong, and I don't have any sources on hand, but I seem to recall that it's been empirically shown that for moderate risk situations, the average person requires a doubling or tripling potential for reward to engage in the risk, even though the math says that's completely unnecessary.

• Not quite. The OP is requesting a word or phrase that relates to having two strategies: one that is a known high cost and another that is of unknown cost. The Gambler's Fallacy might apply to only strategy 2, but that is making the assumption that the analyst perceives a change in start state of strategy 2. If strategy 1 and strategy 2 are completely disjoint in implementation, there will be no overlap cost incurred while implementing strategy 1, so the state of strategy 2 will never update —the coin will never toss. Mar 10, 2015 at 4:56
• @IanMacDonald it's not strictly true that we don't know what the unknown cost for strategy 2 is. In example (1) the risk may involve not just losing money, but incurring debts, bankruptcy, addiction. In example (2) the risk is you may break it, if you don't know what you're doing. In (3) you might actually waste more time searching in those "likely" places than if you had started from the first room and worked onward. In (4) you might be stuck in traffic for an hour or more. Mar 10, 2015 at 12:58
• @Mari-LouA It is strictly true that we don't know what the unknown cost is for any of the examples. That's the definition of the word unknown. We may know which in currency the payment will be made (money, health, time, etc.), but we don't know the cost. Mar 10, 2015 at 13:25
• The topics noted in this post are interesting and related to the issue at hand (Dave .. generally check out "Prisoner's Dilemma" mathematics) but it really has nothing to do with a word or phrase to describe the common situation "devil you do know, devil you don't". Mar 11, 2015 at 0:48