All entries for Thursday 03 March 2016

March 03, 2016

Robust Decision Making

The first days of the RDM module helped me to realise that making a decision is much more complex than I thought. The judgement quiz showed me that our judgements are very poor and bias, because we normally rely on our senses and we do not see what we supposed to see. I normally listen to my system 0 and system 1 when I make decisions, because I am an emotional person, but in business and in other important cases I must use system 2 to make conscious, systematic and logical decisions. I got to know that there are different types of bias, for instance confirmation bias, representativeness bias, anchoring, social bias, ego based bias that all contribute to bad decisions. I also realised the importance of critical thinking before making decisions, because I need to understand the problem first, I need to take all the possible alternatives into account according to the information I have, and I also need to be aware of the potential effect of my decision.

However, there are different decision making tools that can help us to make the right decisions. For instance, the grid analysis can help us to choose the best possible alternative by weighting different factors. The risk analysis can help us to identify potential risks and ways how to eliminate or manage them. The decision tree analysis can give us a graphical picture about our decision and we can evaluate the best decision amongst the alternatives. Thanks to the SMART, we can identify alternatives and their attributes, the performance of each alternatives on each attributes by determining the weight of the attributes and make provisional decisions, then perform a sensitivity analysis. AHP is another powerful technique that derives priorities among criteria and alternatives by decomposing the problem into a hierarchy, by comparing and prioritising the criteria, by synthesising the results and by evaluating the consistency of our judgement. The soft system methodology takes into consideration human factors as different people interpret problems differently. These were just a couple of examples of many different decision making tools.

To sum up, it is significant to make decision using also our system 2 and to decide which is the right method to use in different problems and situations.

March 2016

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