To be honest, I thought this was a good idea at first, but after reading some of the comments, I'm realizing that this is a game based solely on punishment, not reward. If we're going to be playing as you going through your life, why does everything start off maxed? Is it because you're a teenager, and your Intelligence is maxed because you know everything? Is your Charisma maxed because you see yourself as some smooth-talking Bond-like character who can talk his way out of any situation? Is your Authority maxed because you're a model citizen, and thus have the respect of everyone and everything you meet?
Treat these stats like normal stats from an RPG (barring the whole argument in what counts as an RPG or not). As you make right decisions, your skills in a particular area should go up; bad decisions should make your skills go down. You should also put in neutral options that do nothing to those stats. Furthermore, give each option a certain difficulty to go along with them: make the good decisions harder to do (i.e., you need higher stats, a certain item, etc.), but gives the player a substantial reward upon its completion (i.e., stat boost, important item, not dying, etc.). Make the bad decisions easier to do, and have the one that penalizes stats the most the easiest to do. Then, for the neutral options, make them the easiest of all (or not). And if you really want to mix it up, put in options that will raise one skill, while simultaneously lowering others.
If we apply this to your yo-yo example, here's what we could come up with:
1. Ask Michael politely for the yo-yo. ("Best," requires high charisma.)
2. Report Michael to the school authorities. ("Better," Authority goes up, Feared goes down.)
3. Pay someone else to kick Michael's ass, take yo-yo. ("Bad," requires money.)
4. Steal it back, unnoticed. ("Worse," needs a higher Feared stat.)
5. Kick Michael's ass, take the yo-yo. ("Worst," Feared goes up, Authority goes down. Need a high Strength to guarantee a win.)
6. Walk away, forget about the yo-yo. ("Neutral." Nothing happens, but you lose the yo-yo.)
This would require significantly more work on your part, but it would take away from the whole "egotistical life simulator" aspect that you seem to have right now, and would give the player more meaningful choices than what you have now.
Also, if this is going to be your first game of real consequence, you might want to work with on a smaller game with similar significance before going straight into this one. I'm not familiar with the Reality Factory engine, but if it's only used for adventure-style games like this (and I'm assuming it's point-and-click, like the King's Quest series), then you might want to create one that is more puzzle-oriented, rather than one that is focused on offering meaningful choices.