Rational Choice and Judgment: Decision Analysis for the Decider
Decision analysis (DA) is the logic of making a decision using quantitative models of the decider’s factual and value judgments. DA is already widely used in business, government, medicine, economics, law, and science. However, most resources present only the logic and models rather than demonstrating how these methods can be effectively applied to the real world. This book offers an innovative approach to decision analysis by focusing on decision-making tools that can be utilized immediately to make better, more informed decisions. It uses no mathematics beyond arithmetic.
Examining how deciders think about their choices, this book provides problem-solving techniques that not only reflect sound modeling but also meet other essential requirements: they build on the thinking and knowledge that deciders already possess; they provide knowledge in a form that people are able and willing to provide; they produce results that the decider can use; and they are based on intimate and continuous interactions with the decider. The methods outlined in this text take into account such factors as the use, the user, the organization, available data, and subjective knowledge.
Replete with exercises, case studies, and observations from the author’s own extensive consulting experience, the book quickly engages readers and enables them to master decision analysis by doing rather than by simply reading. Using familiar situations, it demonstrates how to handle knowledge as it unfolds in the real world. A term project is presented in the final chapter, in which readers can select an actual decision-making problem and apply their newfound tools to prepare a recommendation. A sample report is provided in the appendix.
Beginning with qualitative structuring, the text advances to sophisticated quantitative skills that can be applied in both public and private enterprise, including:
· Modeling decision-making under conditions of uncertainty or multiple objectives
· Risk analysis and assessment
· Communicating and justifying controversial decisions
· Personal life choices and political judgments
· Adapting decision aid to organizations
The book’s broad applicability makes it an excellent resource for any organization or as a textbook for decision-making courses in a variety of fields, including public policy, business management, systems engineering and general education.
Who Might Use This Book.
Substance of this Book.
Demands on Students and Instructor.
Other Approaches, Other Materials.
Prolog: A Baby Delivery Dilemma.
1. Basics and Overview.
2. Uses of Decision Analysis.
Appendix 2A: Decision Analysis Reflects on His Work.
3. Evaluating a Choice Qualitatively.
4. Quantitative Aid to Rational Choice.
Appendix 4A: Business Decision Tree Example.
Appendix 4B: Private Example: Study or Play?
5. Describing Outcomes.
6. Taking Preference Into Account.
7. Choice Under Uncertainty.
Appendix 7A. Technical Notes.
8. Decision Aiding Strategy.
Appendix 8A. Influence Sketches.
9. Aiding the Professional Decider.
Appendix 9A. Environmental Regulation Case Study.
10. Assessing and Inferring Probabilities.
11. Eliciting Preferences.
12. Applied Term Project.
Appendix 12A. Student Project Report.
Glossary of Concepts and Terms.
Beginning with basics, the text advances progressively, enabling readers to develop and then use more sophisticated decision-making skills that can be applied in both public and private enterprise, including:
- Modelling decision making under conditions of uncertainty or multiple objectives
- Risk analysis and risk assessment
- Facilitating group decision making
- Making personal life choices and political judgments
- Economic analysis of competitive and strategic decisions
- An Instructor's Manual presenting detailed solutions to all the problems in the book is available from the Wiley editorial department.
"…a well-written textbook aimed at helping students make better personal and professional decisions…the techniques in the book are worthy of study." (MAA Reviews, April 8, 2006)
"...the book presents an insight on the practical application of decision analysis in the private and public sector." (EADM Bulletin, Autumn 2005)
"...an excellent resource for any organization or as a textbook for decision-making courses in a variety of fields, including public policy, business management, and systems engineering." (SirReadaLot.org)"This book will be particularly useful to people who must make complex decisions for their organizations. It is very clearly written and well-organized. General readers will find it interesting and accessible."
—Robert Pirie, Former Under Secretary of the Navy and Assistant Secretary of Defense
"In the 40 years since we worked together on the beginnings of decision analysis at Harvard Business School, Brown has adapted it to the practical needs of real deciders and become a uniquely successful decision aider to top executives. He has distilled this experience here for real-world deciders with unmatched authority, clarity and candor."
—Andrew Kahr, business strategist, described as one of the "great visionaries" of the financial world (by Joseph Nocera, A Piece of the Action)
"This is a lively, readable, yet intellectually honest introduction to decision analysis by one of the field's leaders. While it does not review the scholarly literature, it is informed by that literature. The exercises and examples seem excellent because they are realistic (or humorous, or both). The coverage is thorough, practical and well-written."
—Jonathan Baron, author of Thinking and Deciding
"The more complex the decision making task is, the more it is a strange combination of art and science. (This) book makes that very clear and effectively challenges the reader to deal with this ambiguity." --Alan Merten, President, George Mason University