Abstract
People naturally apply their intuitive and logical thinking modes in making decisions. However, uncertainty and complexity predictably cause people to make decisions which, upon further reflection, they no longer consider wise. In addition, the heuristics and biases people apply in making decisions likewise lead them astray. Decision analysis provides a systematic and theoretically sound means of applying intutive and logical thinking to solve these problems and make better decisions.
For all my mind is clouded with a doubt
—Alfred, Lord Tennyson, The Passing of Arthur
The sun…
In dim eclipse disastrous twilight sheds
On half the nations, and with fear of change
Perplexes monarchs.
—Milton, Paradise Lost
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Notes
- 1.
A. Tversky, and D. Kahneman, Judgment Under Uncertainty: Heuristics and Biases, Science 185 (September 27, 1974): 1124–31.
- 2.
Average precipitation figures courtesy of the American Express Appointment Book. You might also note that statistical figures for the middle column would accordingly all be around .50 except for Tokyo, which might be around .90.
- 3.
U.S. Department of Justice, Office of Justice Programs, NCJ-148201, July 1995.
- 4.
The prosecutor’s actual error was in multiplying probabilities together without accounting for the overlap between them. Thus, the suspect was a white man with a mustache, as was the defendant. If 35% of the population is white males and 15% of the people have mustaches, you can’t just say that the probability of being a white male with a mustache is .35 × .15 = .05, and there is therefore only a 5-in-100 chance the defendant is innocent on this basis alone. You need the probability of a mustache given you already know that that defendant is a white male to account for the overlap and make the calculation. For instance, the 15% of the population with mustaches would clearly give a wrong answer if the defendant was a white female.
- 5.
See reference, supra note 1.
Reference
Hubbard, D.W.: The failure of risk management. Wiley, NJ (2009)
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Celona, J. (2016). The Nature of the Beast. In: Winning at Litigation through Decision Analysis. Springer Series in Operations Research and Financial Engineering. Springer, Cham. https://doi.org/10.1007/978-3-319-30040-5_2
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