A632.1.4.RB
Multistage
Decision-Making
How
about the graphic above?! To me, it
reads like stereo instructions. Is
decision-making really a mathematical equation?
I’m going to say…no. However,
there is something definitely very analytical about decision making.
For
this blog, I have been challenged with the following: Hoch, Chapter 3 discusses the power of
everyday reasoning in multistage decision-making. The text discusses the way
that researchers solve multistage problems through the application of formulas
(dynamic programming models) that provide the most significant chances of
success. Critically think about your own decision-making process and reflect on
the process you use in relation to the decision making process recommendations
outlined in the article. How would you apply optimal dynamic decision analysis to
predict the future impact of today's decision? Additionally, would the conclusions
reached on pages 57 of the text improve your decision-making? How and why?
According
to Hoch, et al (2001), “Optimal dynamic programming solutions are based on two
foundational assumptions about problem solving that, if violated, would likely
lead to the poor performance of any intuitive solution:
1. Complete forward planning. When maximizing total utility over a horizon,
decision makers are assumed to look ahead to all future periods and anticipate
all possible choices and outcomes.
2. Optimal learning. Decisions are assumed to fully utilize past
information to update current beliefs and future predictions
Sounds
like I need to be an actuary. Not
really. However, to properly solve
problems, I need to be as analytical and logical as Mr. Spock from “Star Trek” and
as astute and observant as Sean from “Psych”.
I’m a
forward thinker. I am always thing five
steps ahead. Maybe more. Just ask my wife. When a decision is required I fire up the old
gray matter. If I do “this” what will
the potential outcome(s) be? If I need
to get a drink from the fridge, I honestly think about the steps that are
required to fulfill that need. My first
inclination is to ask my wife. However,
if she is doing something else, I certainly can’t ask my dogs so I have to do
it myself. I actually think about the
glass, how much ice is in the freezer, and my beverage of choice and its
location. Silly. I am often called anal which is a derivative
of analytical. This goes for about
everything I do. I actually think about
all the things that can go wrong in my decisions and how to avoid them or
overcome them. Again, ask the
Missus.
I
have learned from my mistakes. I once
used a razor blade to open a paint container.
I no longer do that. I’ll show
you the scar. I once ate too much. I once left a candle burning and fell
asleep. I once backed out of the garage
with my car door open. I once touched a
hot stove. There are a lot of “onces”. Have I done these things twice? Nope.
However, there are things that I have done over and over again being met
with the same results. What causes
this? Myopia. According to Hoch (2001, pg. 46), “What
drives our tendency toward shortsightedness?
The most obvious culprits, of course, are cognitive limitations”. The lights are on but no one is home. It reminds of Albert Einstein’s definition of
insanity, “Doing the same thing over and over again and expecting different
results.”
Ok,
so let us continue to delve into the science of decision making. Decisions are sometimes emotional. Who hasn’t heard of the husband or wife doing
something outside of the norm because of emotion(s)? I mean there are people who have stolen and
even killed because of emotions. So how
do we bridle and harness these emotions?
“The first step to using our approach to emotion-laden decisions is
simply to recognize that emotions have an impact on decisions. Neglecting these considerations may be costly
(Hoch, 2001).” I say, be cognitive of
your emotions.
Look
gentle reader, think critically, think analytically, and be aware of your emotions. Do not base your decisions on feelings, gut, or
emotions. However, a mathematical equation
is not necessary. Think, damn it. Think!
Reference
Hoch, S. J., Kunrreuther, H. C., & Gunther, R. E. (2001). Wharton on making decisions. Hoboken, NJ: John Wiley & Sons
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