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Barry F. Anderson

Copyright © 2002 by Barry F. Anderson

DECISION CHECKLIST
The COURAGE to be RATIONAL
Advisor role, process goal, hope
CREATIVE PROBLEM STRUCTURING
Stimulus variation, force fit
(observation, conversation, checklists)
• Values – Think of alternatives
✔ Stakeholders, +/-, future, self-worth, community
• Alternatives – Think of values, causes, resources
• Facts –
✔ Uncertainties, risky alternatives
BALANCED EVALUATION
Rough sketch, divide-and-conquer
• Screening – Universalizability
• Fact Table – Testability, sampling,
comparison, uncertainty
• +/- Table – Dominance
• 1-to-10 Table – Sensitivity
✔ Control, get information, diversify,
maintain options, share risk
• Decision Tree/Table
COMMITMENT
One-sentence justification

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The Three Secrets of Wise Decision Making

The unassisted hand and the understanding left to itself possess but little
power. Effects are produced by the means of instruments and helps, which
the understanding requires no less than the hand....
Sir Francis Bacon,
Novum Organum, 1620
First Book, Aphorism 2


“If we take the [concept] of cultural evolution seriously, we might look for
the disappearance of decision analysts. There is a precedent. At one time,
professional scribes wrote for those who could not. Later, professional
arithmeticians served the needs of merchants deficient in arithmetical skills.
Both professions have disappeared.”
von Winterfeldt, D. & Edwards, W.,
Decision Analysis and Behavioral Research,
1986, p. 544. (Reprinted with the permission of Cambridge University Press.)


PREFACE

As the world has become more complex and information more abundant, decisions
have become more difficult; as the pace of change and the range of choice have increased,
decisions have to be made more often. Yet, most of us still make decisions with no more
knowledge about decision processes than our ancestors had in a simpler age, 
hundreds of years ago.

Thanks to mathematicians, economists, psychologists, and decision analysts, we now
know a good deal about decision making. We know something about what constitute good
decision processes, and we know that good decision processes tend to lead to good
outcomes. For example, those who employ good decision processes tend to get higher
grades and earn higher salaries (Larrick, Nisbett, & Morgan, 1993); and, when decision
makers' judgments are incorporated into decision models, the models tend to outperform
the decision makers, themselves (Dawes, 1979, 1989).

One study (Herek, Janis, & Huth, 1987) evaluated major decisions made by the United
States government over several years. For each decision, independent ratings were made
of (a) the quality of the decision process and (b) the extent to which U. S. objectives were
met. The correlation between these two measures was a whopping +.63! (This is better
than the correlation between the heights of parents and the heights of their children.) This
indicates that, even at the level of governmental decisions, where so many things can go
wrong, good decision processes are strongly related to good decision outcomes.

We also know that good decision processes can be learned, and we know something
about how to teach them. For example, economics professors and students, who have
formal training in decision making, are more likely than others to decide rationally, even
when the decisions are not closely related to the content of economics courses (Larrick,
Morgan, & Nisbett, 1990). (See also Whimby & Whimby, 1975).

Yet we are not communicating what we know as effectively as we might. At the
college level, courses in decision psychology are typically focussed on the presentation of
research findings and theoretical explanations of these findings, providing, essentially,
declarative, or factual, knowledge. Instruction in good decision-making practice is
ancillary, at best, and actual practice in decision-making skills, rare in such courses. While
courses of this kind are necessary, they aren't sufficient. Only the exceptional student can
pass from declarative knowledge to procedural, or performance, knowledge without help.

We need another kind of course, both for the students who take the courses that focus
on declarative knowledge and for those who don't. Such a course should provide for
stimulus learning: how to recognize a decision situation, how to recognize irrationality,
how to recognize uncreative thought, how to recognize information overload, and how to
recognize bad decision logic. Such a course should also teach appropriate responses for
these situations, along with their underlying logic. Finally, such a course should provide
students abundant practice in applying abstract principles to concrete cases.

Personal decisions, both the students’ own and those of their fellow students, are the
most convenient and relevant, but organizational and societal decisions are also
appropriate, especially when current. If we are to maximize the benefits of research in
decision making, we must take more seriously the teaching of the procedural aspects of
decision making to those who will raise children, hold jobs, vote, and engage in other
behaviors that affect their quality of life and that of those about them. Courses in personal
decision making fill this important gap—and they are interesting and fun, both to teach
and to take. A course that can't be based entirely on lecture notes but must evolve in
response to decision problems in the students' lives is a continuing adventure for both
professor and student.

The Three Secrets of Wise Decision Making covers the Courage to be Rational,
Creativity, and Balanced Judgment—the “Three Secrets”. All academically respectable
treatments of decision making recognize the problem of limited information-processing
capacity and consider ways in which decision makers can deal with complexity in a
judicious manner, by means of heuristics and decomposition algorithms. An increasing
number are also coming to recognize limited creativity as a problem and to provide some
help with it. Few, however, even recognize irrationality as a problem. Yet the courage to be
rational is an absolute prerequisite for sound decision making. If the decision maker is
seeking only to justify a favored alternative, the other aids to decision making may only
make it easier to proceed in the wrong direction! The Three Secrets appears to be unique in
providing a balanced treatment of all three aspects of decision making.

The Three Secrets is organized around the Decision Ladder, a structured array of
techniques to suit a variety of decision problems and a variety of decision makers. The
Ladder extends from largely intuitive approaches, at the bottom, to highly analytic tree/
table decision diagrams at the top. The key rung on the Ladder is the decision table and its
variants: fact tables, plusses-and-minuses value tables, and 1-to-10 value tables. It is
recommended that the reader start at the bottom of the Decision Ladder when beginning
work on any decision problem and work up only so far as necessary. This keeps the
process of decision making from becoming more complicated than would be appropriate
for either the decision problem or the decision maker.

The biologist Thomas Huxley said that all nature is like an art museum, but for most of
us most of the paintings are facing the wall. Interesting decision problems surround us all
nearly every day. Yet we fail to recognize many as decision problems, and those we do
recognize we seldom see very deeply into. As you read this book, all that should change.
As you turn this page, you'll be drawing back the curtain on a new window to the world. I
hope you find it as exciting as many of us do.

I'd like to thank Michael Johnson, Heidi Stardig, and Linda Newton-Curtis, who
provided substantial help with both the Personal Decision Making course and the book,
and Gretchen Oosterhout, Benson Schaeffer, Charles Schwenk, John Settle, and Jerry
Guthrie, who provided help with the book, and I'd also like to thank all of these people, in
addition, for the many valuable conversations we've had that have, in a less direct way,
enhanced the quality of the book. As you read The Three Secrets, you may hear one voice,
but as I read it I hear their and others' helpful voices. Finally, I'd like to thank Winky
Wheeler (http://whimsicalplanet.com), whose art livens up the book and helps the reader
keep track of the concepts of courage, creativity, and balanced judgment.
BFA


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Product details
 Price
 File Size
 10,311 KB
 Pages
 276 p
 File Type
 PDF format
 ISBN
 0-9722177-0-3
 Copyright
 2002 by Barry F. Anderson 

Table of Contents
PREFACE
Chapter 1. DECISIONS, DECISIONS, DECISIONS
Chapter 2. COURAGE, CREATIVITY, & BALANCE
Cognitive Conflict......................................................................................14
Secret One: The Courage to be Rational ...................................................20
Secret Two: Creativity ...............................................................................31
Secret Three: Balanced Judgment..............................................................48
Chapter 3. VALUES: What do I want?
Value Checklists, Analysis of Alternatives & Events, Value Trees ..........69
Subgoal Analysis .......................................................................................81
Criteria for a Well-Structured Value Set ...................................................83
Chapter 4. ALTERNATIVES: What can I do?
Analysis of Values, Alternatives, Causes, & Resources;
and Alternatives Checklists .....................................................................106
Classification, Analysis into Sub-Problems.............................................118
Criteria for a Well-Structured Set of Alternatives ...................................119
Chapter 5. THE MIGHTY DECISION TABLE: How do I choose?
Prioritized Lists........................................................................................125
Screening .................................................................................................129
Decision Tables........................................................................................132
Commitment and Follow-Through ..........................................................154
Chapter 6. UNCERTAINTY: What could happen?
Awareness of Uncertainty........................................................................162
Regret.......................................................................................................167
Creating “Uncertainty-Proof” Alternatives .............................................168
Sensitivity Analysis .................................................................................174
Decision Trees .........................................................................................180
Chapter 7. WHAT NOW?
Appendix A. THINKING MORE DEEPLY ABOUT VALUES
Value Curves............................................................................................189
Value and Probability Rulers ...................................................................194
Appendix B. THINKING MORE DEEPLY ABOUT ALTERNATIVES
More on Analysis into Sub-Problems......................................................207
Strategy Tables ........................................................................................209
Appendix C. THINKING MORE DEEPLY ABOUT UNCERTAINTY
Maximization of Expected Value ............................................................213
Attitude Toward Risk...............................................................................217
Probability Judgment ...............................................................................220
Sensitivity to Probabilities .......................................................................226
Probability Trees......................................................................................228
REFERENCES
INDEX

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