Robust decision making – what have I learnt?
Robust Decision Making was a quite mysterious module title for me. It was clear what decision making is, but what does 'robust' mean? Well, it is all about analysing different possibilities and influencing factors, creating scenarios and choosing this alternative which is indifferent after small changes in the environment. For example if I take a credit in the same currency in which I earn money, it will be robust in comparison to taking a credit in a different currency (cause in case of a fluctuation in exchange rate, I will need to give back different amount of money than I borrowed).
I was surprised with the results of the test assessing our judgement - I had only 3 answers correct out of 12! It is scary to think how many wrong decision we make every day due to relying on our system 1 and falling into a trap of different heuristics. I was unaware how bad visual problems, quantitative judgement or logical judgement might be. I was falling into Gamblers Fallacy or recognized a pattern where there was any not a single time... So what can I do about disfunctions of our brain? How can I improve my decision making process?
Well, there are many tools we can use - MaxiMax, MaxiMin, Expected Value, Decision Tree. I have always liked the last one, as it clearly divides a complex decision into steps and assigns value and probability to each of it. I think it helps to structure the problem and I will try to use it to better understand the case of WaveRiders while preparing the presentation.
SMART, which stands for Simple Multiple Atribute Rating Technique, is another useful tool. As long as we can list the attributes, assign weight to them and rate each possibility against each attribute, SMART will help us to choose optimal option or at least eliminate the suboptimal ones. I think I could use it to choose a job if I had a few offers on the table, rating each option against attributes such as salary, career progression, training available, skills development, team or atmosphere in the office.
Despite abundance of decision making tools and techniques, following a good decision making process does not guarantee a good decision outcome. Even badly taken decisions can bring good outcomes. So what are our chances of getting good results? And even if a different decision could have brought better results, would we ever realise it?