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Concept
Trade-off
Summary
A trade-off (or tradeoff) is a situational decision that involves diminishing or losing one quality, quantity, or property of a set or design in return for gains in other aspects. In simple terms, a tradeoff is where one thing increases, and another must decrease. Tradeoffs stem from limitations of many origins, including simple physics – for instance, only a certain volume of objects can fit into a given space, so a full container must remove some items in order to accept any more, and vessels can carry a few large items or multiple small items. Tradeoffs also commonly refer to different configurations of a single item, such as the tuning of strings on a guitar to enable different notes to be played, as well as an allocation of time and attention towards different tasks.
The concept of a tradeoff suggests a tactical or strategic choice made with full comprehension of the advantages and disadvantages of each setup. An economic example is the decision to invest in stocks, which are risky but carry great potential return, versus bonds, which are generally safer but with lower potential returns.
The theoretical description of trade-offs involves the pareto front.
The concept of a trade-off is often used to describe situations in everyday life.
In economics a trade-off is expressed in terms of the opportunity cost of a particular choice, which is the loss of the most preferred alternative given up. A tradeoff, then, involves a sacrifice that must be made to obtain a certain product, service, or experience, rather than others that could be made or obtained using the same required resources. For example, for a person going to a basketball game, their opportunity cost is the loss of the alternative of watching a particular television program at home. If the basketball game occurs during her or his working hours, then the opportunity cost would be several hours of lost work, as they would need to take time off work.
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