All entries for Wednesday 15 March 2017
March 15, 2017
The title of this module is Robust Decision Making. Before taking this module, I thought I am quite familiar with making decisions and I don’t have to learn how to make decisions in a lecture. However, after taking the lectures, I find that I am totally wrong.
At the first day, we learned three different decision-making systems. The system 0 is called instinctive system, which refers to fast, automatic, unconscious decisions that are based on animal instinct. Actually, we use the system 0 very often. The system 1 is intuitive system that is fast, automatic and effortless. The system 2 is the process-based system, which requires slower, conscious, effortful and logic decision-making process. I think knowing this is really helpful for me. The lesson for me is: I realized that sometimes, we made wrong decisions because of that the importance of the decision does not match the level of decision-making systems. The effort we pay into one decision-making process should be depend one the importance and complexity of the decision itself. We should use system 0 for daily decisions such as choosing food, use system 1 for relative important decisions, and use system 2 for complex and important decisions such as choosing future careers.
We also did a lot of test on the judgment lecture, and the learning point of that session for me is: never trust your feeling, and never rely on your instinct when making decisions. The feeling and instinct might be correct sometimes, but that doesn’t mean it is powerful and reliable. The definition of decision is an outcome drawn from a list of alternatives and options, and it is complex since it contains some inside and outside factors and it might have influence for some future event. Therefore, we should rely on available information and rational analysis when making decisions, no matter it is a personal decision, group decision or business decision.
At the second day, we learn many useful tools for decision making, such as cost benefit analysis process, grid analysis, paired comparison analysis process and pareto analysis process. In my opinion, those tools are useful and effective because they are quantifying our decision making processes. When using those tools, we list the cost, benefit, influencing factors of all alternatives, calculate and compare them, then choose a best one at the end. The tools actually help us avoid the risks and save time.
However, I think we cannot only rely on the tools when making decisions in a real business environment. Generally, the more important on decision is, the more stakeholders it will influence. Thus, there are some other factors the decision-making tools do not consider. Firstly, we have to taking into account not only current condition but also future development of a business. Except the short-term benefit and cost, the decision now might influence the sustainable future development of the company. Some rational predictions are needed. Secondly, those decision-making tools do not consider the outside stakeholders enough. For example, we can only decide whether to build a new factory in a certain city because it might provide highest benefit and lowest cost for the company if we only use those quantitative decision-making tools. However, a good business decision should also be social responsible. In a real business world, the companies might also consider: “what kind of positive and negative influence it will have for the local citizens? Will the new factory cause environment problem for the city? “ Therefore, we cannot totally rely on decision-making tools when making complex decisions.