The Science of Deciding
What has fifty years of research actually established about how to make decisions under uncertainty?
There is now a large body of research on how people decide, and much of what reaches managers is a simplified summary of it. This path goes back to the sources and follows the arguments between them.
It starts with the heuristics-and-biases programme and the standards of rational choice against which it measured people. It then gives the strongest counter-case, the study of expert intuition in the field, and the most rigorous test of expert judgement, Tetlock’s forecasting tournaments. It confronts the limits of probability with Kay and King, and the failures of planning in complex systems with Dörner, before ending with two practical methods: structured decision analysis and measurement.
Read with the How to Judge a Decision path, which is more accessible, this one goes deeper. The idea of The Inside View and the Outside View and the Decide cases are the places to practise.
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The original papers. Reading Tversky and Kahneman’s 1974 article and the studies around it shows what was claimed, how it was tested and how carefully the authors qualified it.
- Read it for
- Representativeness, availability and anchoring as first described, and the experiments behind them.
- Carry forward
- Which heuristic do I rely on most when I have no time to think?
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Rational Choice in an Uncertain World
A rigorous textbook that sets the biases against the standards of rational choice, so a reader can see exactly where intuition departs from them.
- Read it for
- Probability, expected value, the value of information and the chapters on clinical versus statistical judgement.
- Carry forward
- Where would a simple formula outperform our experts’ judgement?
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The other side of the argument. Klein studied firefighters, nurses and commanders and found expert intuition working well, through recognising patterns rather than comparing options.
- Read it for
- Recognition-primed decision making, mental simulation and the conditions under which intuition can be trusted.
- Carry forward
- Does our environment give people the fast, clear feedback that real expertise needs?
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Tetlock’s twenty-year study of expert forecasts measured how often experts were right, and found that how they thought mattered more than what they knew.
- Read it for
- Foxes and hedgehogs, calibration and the case for keeping score.
- Carry forward
- Who in our organisation is held to account for the accuracy of their forecasts?
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A challenge to the whole enterprise. Kay and King argue that many important decisions involve uncertainty that cannot be reduced to probabilities, and that narratives, not numbers, are how people cope.
- Read it for
- The difference between puzzles and mysteries, and the question “What is going on here?”
- Carry forward
- Which of our forecasts are numbers we invented to avoid admitting we do not know?
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Dörner’s computer-simulated worlds showed intelligent people failing at complex systems in consistent ways, by ignoring side effects, over-correcting and mistaking activity for progress.
- Read it for
- The experiments, and the pattern of errors in planning and adjusting under delay and feedback.
- Carry forward
- What delayed side effect of our current decision are we not yet watching?
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Turns research into a method. Three decision scientists lay out a practical sequence: define the problem, clarify objectives, create alternatives and weigh consequences and trade-offs.
- Read it for
- The PrOACT framework, and the chapters on uncertainty, risk tolerance and linked decisions.
- Carry forward
- Have we generated real alternatives, or only the option we already favour and a straw man?
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Ends with measurement. Hubbard shows that most things managers call unmeasurable can be measured well enough to reduce uncertainty, and how to calculate whether measuring is worth it.
- Read it for
- Calibration training, the value of information and small-sample methods.
- Carry forward
- What is the one uncertainty that, if reduced, would most change our decision?
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