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Decision analysis

Decision making can be divided into three systems: Emotional, rational, and perceptual systems.

The rational model is one where the beliefs and desires are supposed to be determined, but decision analysis of the last thirty years has shown that it doesn't work. Even people who are explicitly trained to used System 2 thinking (reasoning) in problems don't do so, even when they know they should.

It doesn't mean you shouldn't take decision analysis, just that decision analysis are not effective if decision-makers do not want to relinquish the intelligence function to somebody else.

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MORE IDEAS FROM THE SAME ARTICLE

People are not accustomed to thinking hard. They are often satisfied with a plausible answer that comes quickly to mind.

  • Groups are better equipped than individuals to recognize an answer as correct. But, when the whole group is susceptible to similar biases, groups are inferior to individuals.
  • Polarization can occur in groups. One major bias in risky decision making is optimism, while doubts are sup...

There are two thinking systems, each with distinct characteristics.

The perception of and reaction to risk is often dismissed as emotional. The first thing that happens is you're afraid, and from that fear, you feel risk. So the view of risk is becoming less cognitive while emotion becomes dominant.

Decision analysis is based on the idea that decision making is a choice between gambles. Managers think that they are fighting risk in a controlled way. The idea that you are gambling is an admission that you have lost control. It is detestable to decision managers, and the reason they reject dec...

Both individuals and groups need mechanisms to review how their decisions are made.

In statistical thinking, professional statisticians informally think the degree of the probability distribution in a small group will closely resemble the probability distribution in the overall population.

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