The Art and Science of Making Up Your

Mind Rex V. Brown

Visit to download the full and correct content document:
https://textbookfull.com/product/the-art-and-science-of-making-up-your-mind-rex-v-br
own/
More products digital (pdf, epub, mobi) instant
download maybe you interests ...

Tidy the F ck Up The American Art of Organizing Your Sh

t Messie Condo

https://textbookfull.com/product/tidy-the-f-ck-up-the-american-
art-of-organizing-your-sh-t-messie-condo/

Players making decisions game design essentials and the

art of understanding your players Hiwiller

https://textbookfull.com/product/players-making-decisions-game-
design-essentials-and-the-art-of-understanding-your-players-
hiwiller/

Jazz and the Philosophy of Art Lee B. Brown

https://textbookfull.com/product/jazz-and-the-philosophy-of-art-
lee-b-brown/

Testosterone Rex Myths of Sex Science and Society First

Edition Fine

https://textbookfull.com/product/testosterone-rex-myths-of-sex-
science-and-society-first-edition-fine/
Pranayama The Vedic Science of Breath 14 Ultimate
Breathing Techniques to Calm Your Mind Relieve Stress
and Heal Your Body Advait

https://textbookfull.com/product/pranayama-the-vedic-science-of-
breath-14-ultimate-breathing-techniques-to-calm-your-mind-
relieve-stress-and-heal-your-body-advait/

Autonomy: The Social Ontology of Art under Capitalism

Nicholas Brown

https://textbookfull.com/product/autonomy-the-social-ontology-of-
art-under-capitalism-nicholas-brown/

Set Up And Manage Your Virtual Private Server: Making

System Administration Accessible To Professionals Jon
Westfall

https://textbookfull.com/product/set-up-and-manage-your-virtual-
private-server-making-system-administration-accessible-to-
professionals-jon-westfall/

Tibetan Yoga for Health Well Being The Science and

Practice of Healing Your Body Energy and Mind Alejandro
Chaoul

https://textbookfull.com/product/tibetan-yoga-for-health-well-
being-the-science-and-practice-of-healing-your-body-energy-and-
mind-alejandro-chaoul/

Mind Body Cleanse The 12 Day Plan to Heal Your Body and
Re Energise Your Mind Chris James

https://textbookfull.com/product/mind-body-cleanse-the-12-day-
plan-to-heal-your-body-and-re-energise-your-mind-chris-james/
The Art and Science of Making Up Your Mind
The Art and Science of Making Up Your Mind presents basic decision-making
principles and tools to help the reader respond efficiently and wisely to ev-
eryday dilemmas.
Although most decisions are made informally (whether intuitively without
deliberate thought, or based on careful reflection), over the centuries people
have tried to develop systematic, scientific and structured ways in which to
make decisions. Using qualitative counterparts to quantitative models, Rex
Brown takes the reader through the basics, like “what is a decision” and
then considers a wide variety of real-life decisions, explaining how the best
judgments can be made using logical principles.
Combining multiple evaluations of the same judgment (“hybrid judg-
ment”) and exploring innovative analytical concepts (such as “ideal judg-
ment”), this book explores and analyzes the skills needed to master the basics
of non-mathematical decision making, and what should be done, using real
world illustrations of decision methods.
The book is an ideal companion for students of Thinking, Reasoning and
Decision-Making, and also for anyone wanting to understand how to make
better judgments in their everyday lives.

Rex V. Brown’s 50-year career combined research, consulting and teaching

on helping people and organizations to make better decisions. He wrote five
previous books on decision science and more than 80 papers and articles.
Brown was a Distinguished Senior Fellow in the School of Public Policy at
George Mason University. He held faculty appointments at Harvard Business
School, University College London, London School of Economics and the Uni-
versities of Michigan, Carnegie-Mellon, George Mason and Cambridge. He
spent 20 years as Chairman of Decision Science Consortium, Inc. in Re-
ston, Virginia, and was a founding Council Member of the Decision Analysis
Society.
ii

This highly readable book aims to teach the reader to obtain a superior
second opinion – from herself. A wealth of often provocative examples reveals
the wisdom of a master of applied decision theory. – Daniel Kahneman, Nobel
Prize Winner, Author of Thinking, Fast and Slow, Eugene Higgins Professor
of Psychology Emeritus at Princeton University, USA

A trailblazing pioneer in decision education, Rex Brown has provided us

with invaluable examples, tools, evidence and arguments for everyone to in-
vest in their decision skills. – Chris Spetzler, Executive Director, Decision
Education Foundation, USA

Rex Brown spent all his working life thinking about how to make decisions
well. This book is the culmination of his thought. He concentrates on the es-
sential ideas, illustrated with many practical examples, and avoiding most of
the mathematics that surrounded the subject when originally formed. This
excellent text is to be recommended to all who want a readable and straight-
forward introduction to the analysis of any decision. – Professor Stephen
Watson, Life Fellow, Emmanuel College, Cambridge University, UK

Did you ever think hard about a decision and later feel like it had been
a bad mistake? After decades advising others and trying to avoid making
more mistakes myself, I urge you to read this book now. No psychology or
statistics, just lots of pithy, how-to-do-it, real examples. You’ll make better
decisions easily, and you’ll have fewer regrets. – Andrew Kahr, Founder:
First Deposit Corporation, formerly Assoc. Prof. of Business Administration,
Harvard Business School, USA

Rex Brown’s The Art and Science of Making Up Your Mind is a non-
technical textbook and guidebook for how to understand and use basic prin-
ciples and tools of applied decision theory to deal effectively with everyday
decisions and difficult dilemmas. Rex Brown is a wise mentor and reliable
companion. He guides the reader through basic questions such as ’what is a
decision’ and ’what is an ideal judgment.’ He then draws on personal, fam-
ily and friends’ decisions in professional life, health, illness, and voting to
elucidate how quantitative decision aids and qualitative considerations help
 iii

clarify problems and lead to sound decisions. An indispensable resource for

students and all decision makers. – Professor Leon Mann AO, Professorial
Fellow,School of Psychological Sciences, University of Melbourne, Australia

This gem of a book synthesizes the life’s work of one of decision science’s
seminal thinkers. Rex Brown’s passion was making the tools and thought
processes of applied decision theory accessible to ordinary people. This clear
and entertaining how-to manual uses examples from his own life and the
lives of his family to help readers grasp how we can realize our potential for
better everyday decision-making and, ultimately, greater satisfaction in our
lives. — Kathryn Blackmond Laskey, Professor of Systems Engineering and
Operations Research, George Mason University
The Art and Science of Making Up
Your Mind

Rex V. Brown

Edited by Jonathan Baron and Karen Brown

First published 2020
by Routledge
52 Vanderbilt Avenue, New York, NY 10017
and by Routledge
2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN

Routledge is an imprint of the Taylor & Francis Group, an informa business

© 2020 Taylor & Francis

The right of Jonathan Baron and Karen Brown to be identified as the authors
of the editorial material, and of the authors for their individual chapters, has
been asserted in accordance with sections 77 and 78 of the Copyright, Designs
and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
utilised in any form or by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in any
information storage or retrieval system, without permission in writing from
the publishers.
Trademark notice: Product or corporate names may be trademarks or regis-
tered trademarks, and are used only for identification and explanation with-
out intent to infringe.

Library of Congress Cataloging-in-Publication Data

A catalog record for this title has been requested
ISBN: 978-1-84872-917-9 (hbk)
ISBN: 978-1-84872-657-4 (pbk)
ISBN: 978-0-367-27863-2 (ebk)

Typeset in Computer Modern by Jonathan Baron

Contents

Editors’ preface xiii

1 Introduction 1
1.1 Potential need . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Distinctive features of this text . . . . . . . . . . . . . . . . . 3
1.3 Vocabulary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Historical background . . . . . . . . . . . . . . . . . . . . . . . 4
1.4.1 ADT methods . . . . . . . . . . . . . . . . . . . . . . . 6
1.4.2 My own ADT evolution . . . . . . . . . . . . . . . . . 6
1.5 Looking ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2 Decision making 9
2.1 What is a decision? . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1.1 Ideal decision . . . . . . . . . . . . . . . . . . . . . . . 10
2.1.2 Value of wisdom . . . . . . . . . . . . . . . . . . . . . 10
2.2 Requirements of wise action . . . . . . . . . . . . . . . . . . . 11
2.2.1 Accounting for all available knowledge . . . . . . . . . 11
2.2.2 Wisdom is no substitute for knowledge . . . . . . . . . 12
2.2.3 Good outcomes may not imply wise decisions . . . . . 13
2.3 Current decision practice . . . . . . . . . . . . . . . . . . . . . 14
2.3.1 The world of private decisions . . . . . . . . . . . . . . 14
2.3.2 Room for improvement . . . . . . . . . . . . . . . . . . 14
2.3.3 Motivation for wisdom . . . . . . . . . . . . . . . . . . 15
2.3.4 Opposition to rationality . . . . . . . . . . . . . . . . . 16
2.3.5 Raw material: The contents of your mind . . . . . . . 17

vii
viii CONTENTS

2.3.6 Decision vs. action . . . . . . . . . . . . . . . . . . . . 17

2.3.7 Precept vs. process . . . . . . . . . . . . . . . . . . . . 18
2.4 Decider roles . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.4.1 Personal decisions . . . . . . . . . . . . . . . . . . . . . 19
2.4.2 Civic decisions . . . . . . . . . . . . . . . . . . . . . . 19
2.4.3 Civic vs. professional decisions . . . . . . . . . . . . . . 20
2.5 Student end product . . . . . . . . . . . . . . . . . . . . . . . 21
2.6 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.6.1 Bad outcome — good decision . . . . . . . . . . . . . . 22
2.6.2 Decider role . . . . . . . . . . . . . . . . . . . . . . . . 23

3 Term project: Evaluating a policy proposal 25

3.1 Task . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.2 Nature of issues to be evaluated . . . . . . . . . . . . . . . . . 25
3.3 Project activity during course . . . . . . . . . . . . . . . . . . 26
3.4 Sample proposals . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.5 Final report . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.5.1 Suggested report sections . . . . . . . . . . . . . . . . . 27
3.6 Standing assignment after each chapter . . . . . . . . . . . . . 28

4 Qualitative decision aids 29

4.1 Types of decision aid . . . . . . . . . . . . . . . . . . . . . . . 29
4.1.1 Prescriptive decision analysis . . . . . . . . . . . . . . 29
4.1.2 Applied decision theory . . . . . . . . . . . . . . . . . . 31
4.2 Projection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.2.1 Visualizing option aftermaths . . . . . . . . . . . . . . 31
4.3 Anchoring judgments . . . . . . . . . . . . . . . . . . . . . . . 33
4.3.1 Comparing this dilemma with past decisions . . . . . . 33
4.3.2 “Expert” opinion . . . . . . . . . . . . . . . . . . . . . 34
4.3.3 Adapted decision rules . . . . . . . . . . . . . . . . . . 34
4.4 Decomposing a decision into stages . . . . . . . . . . . . . . . 35
4.4.1 Going through “HOOPS” . . . . . . . . . . . . . . . . . 35
4.4.2 Caution — Confusing factual and value judgments . . 36
4.4.3 Implementing HOOPS . . . . . . . . . . . . . . . . . . 37
4.5 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
CONTENTS ix

4.5.1 Informal reflection . . . . . . . . . . . . . . . . . . . . 37

4.5.2 Asking the right questions . . . . . . . . . . . . . . . . 38
4.5.3 Other exercises . . . . . . . . . . . . . . . . . . . . . . 38
4.5.4 Distinguishing factual from value judgments . . . . . . 41

5 Hip surgery case 43

5.1 Preliminary evaluations of hip choice . . . . . . . . . . . . . . 44
5.1.1 Intuition . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.1.2 Consultation . . . . . . . . . . . . . . . . . . . . . . . 44
5.1.3 Cognitive vigilance . . . . . . . . . . . . . . . . . . . . 44
5.1.4 Analogy . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.1.5 Visualized aftermaths . . . . . . . . . . . . . . . . . . . 45
5.1.6 Interim synthesis of evaluations . . . . . . . . . . . . . 45
5.2 Main evaluation effort . . . . . . . . . . . . . . . . . . . . . . 45
5.2.1 Student participation in hip choice . . . . . . . . . . . 45
5.2.2 Simplifying the options . . . . . . . . . . . . . . . . . . 46
5.2.3 Choice criteria and option impacts . . . . . . . . . . . 47
5.3 Synthesis of conflicting appraisals . . . . . . . . . . . . . . . . 48
5.3.1 Synthesis at the time . . . . . . . . . . . . . . . . . . . 48
5.3.2 Hindsight synthesis . . . . . . . . . . . . . . . . . . . . 49
5.4 Seek more information before deciding? . . . . . . . . . . . . . 49
5.5 Post scripts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.5.1 Sequel . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.5.2 Action vs. decision . . . . . . . . . . . . . . . . . . . . 50
5.5.3 A later choice . . . . . . . . . . . . . . . . . . . . . . . 50
5.6 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

6 Quantitative ADT modeling 53

6.1 Quantitative decision reasoning . . . . . . . . . . . . . . . . . 53
6.1.1 Reasoned decisions . . . . . . . . . . . . . . . . . . . . 53
6.1.2 Models . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.2 Applied decision theory (ADT) . . . . . . . . . . . . . . . . . 54
6.2.1 Normative decision theory . . . . . . . . . . . . . . . . 54
6.2.2 Applied decision theory models . . . . . . . . . . . . . 54
6.2.3 Utility as a measure of satisfaction . . . . . . . . . . . 55
x CONTENTS

6.2.4 Uncertain utility . . . . . . . . . . . . . . . . . . . . . 55

6.3 Quantifying HOOPS: Decision trees . . . . . . . . . . . . . . . 56
6.3.1 Basic decision tree mechanics: Simple example . . . . . 56
6.3.2 “Bachelor Joe” example . . . . . . . . . . . . . . . . . . 57
6.4 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

7 Family case study: C-section vs. “natural” child-birth? 61

7.1 A baby delivery dilemma . . . . . . . . . . . . . . . . . . . . . 61
7.2 Postscript (six months later) . . . . . . . . . . . . . . . . . . . 66
7.2.1 Post-postscript . . . . . . . . . . . . . . . . . . . . . . 67
7.3 Technical commentary . . . . . . . . . . . . . . . . . . . . . . 67
7.3.1 Decision-making issues raised . . . . . . . . . . . . . . 67
7.3.2 Applied decision theory . . . . . . . . . . . . . . . . . . 68
7.3.3 My contribution as analyst . . . . . . . . . . . . . . . . 68
7.4 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

8 Using ADT models 71

8.1 Formal vs. informal evaluations . . . . . . . . . . . . . . . . . 71
8.2 Caution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.3 Combining ADT with alternative evaluations . . . . . . . . . . 73

9 A civic case: Voting for president 75

9.1 Leah’s vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.2 Abe’s vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
9.3 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

10 Information value case: Life-saving diagnosis 81

10.1 Decision strategy . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.2 Diagnosis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.3 Assessments imputed to D’s diagnosis . . . . . . . . . . . . . . 83
10.3.1 Sensitivity analysis . . . . . . . . . . . . . . . . . . . . 84
10.4 Formal underpinning diagnosis . . . . . . . . . . . . . . . . . . 84
10.5 Does diagnosis warrant testing? . . . . . . . . . . . . . . . . . 85
10.6 Credit to ADT? . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.7 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
CONTENTS xi

10.8 Postscript . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

11 Expanded view: Should we teach decision making in school? 89

11.1 Reading, writing and decision making . . . . . . . . . . . . . . 89
11.2 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
11.2.1 Initial assignment . . . . . . . . . . . . . . . . . . . . . 93
11.2.2 Exercises for end of course . . . . . . . . . . . . . . . . 93

12 Epilogue — What next? 95

12.1 Making use of what you have learned . . . . . . . . . . . . . . 95
12.1.1 Basic ADT logic . . . . . . . . . . . . . . . . . . . . . 95
12.2 Developing your reasoning further . . . . . . . . . . . . . . . . 96

Bibliography 99

Index 100
Editors’ preface

When Rex Brown died from the effects of pancreatic cancer in 2017, he had
completed a near-final draft of this book, and had succeeded in obtaining a
commitment from the publisher. He kept working on revisions until two days
before his last breath. But many loose ends remained. He had wanted to
add some additional chapters, but they were deemed unnecessary (including
by Rex). There were several inconsistent references from chapter to chapter,
and occasional missing examples.
Fortunately, the editor in charge at Taylor & Francis, Ceri McLardy, took
the commitment to publish seriously. It was already clear that Jonathan
(Jon) Baron, a collaborator of Rex’s and himself an academic decision-
scientist, was in the best position to do the substantive editing. Jon had
begun this work before Rex died, but various other commitments got in the
way (as well as Rex’s obsessive rewriting).
Jon was a colleague and friend of Rex’s for many years. He is happy to be
able to help bring this, his last work, to fruition. He too is a true believer in
the value of some sort of decision analysis for ordinary people, and his views
on this were shaped by Rex, over many years.
Rex’s daughter Karen, a journalist, helped work on editorial clarity, in
part because she could recognize the times when what Rex meant did not
exactly line up with what he wrote. She promised him, in his final months,
that she would clean up the wording that his overtaxed brain and body didn’t
always get right, and that she would usher this project – the main focus of
his final years, right behind his beloved family – to publication. The irony
is, when Karen was growing up, Rex always wanted to explain to her the
inner workings of applied decision theory, and she was usually too impatient
to listen. Now she wishes she could ask more questions.
We have kept almost all of the substance of the original, except when it
was redundant, while also making decisions about whether to keep or delete

xiii
xiv

optional parts of the text. In a few cases, where we thought that Rex was
over-stating something, we moderated the language, and we replaced a few
references and examples with others that we thought were more current.
Finally, we thank the following for their generous editorial and logistical
support (in alphabetical order): Leora Brown, Tamara Brown, Dalia Brown,
Gregory Burnside, Marianne Chindgren, Michele Daly, Kobe Fox, Kathy
Laskey, Brian Mancuso, Lucy Norton, Sam Norton, Sean Norton, and Sarah
Shapiro.
Chapter 1

Introduction

As author, my goal is to offer readers, whatever their aptitude, interest or

background, the skills to master a basic set of non-mathematical decision-
making tools. Those skills will enable them to make wiser everyday decisions,
both large and small, which will lead them to more satisfying lives. This text
is a first step along that path, with a narrower scope: choices among options
for personal dilemmas, such as whether to get married or whom to vote
for. And unlike traditional decision-analysis, this book aims to bypass the
burdensome technical methods that often turn off the everyday decider.
It is designed for use in a college course, but can also serve as “self-help”
for the general reader.

1.1 Potential need

The prevalence of poor decision-making has been well-established and docu-
mented in best-sellers such as Daniel Kahneman’s “Thinking, fast and slow”
(2011). People make terrible decisions when they should have known better,
and it may cost them dearly. They marry partners who are likely to make
their lives miserable. They vote for a candidate even when they have clear
evidence to the contrary that another candidate would govern more to their
liking. There is plentiful research on how people make decisions already, but
little on how people could make wiser decisions.
In the latter part of the 20th century, “Applied Decision Theory (ADT)”
was developed, and the method was a substantial vogue in academic and

1
2 CHAPTER 1. INTRODUCTION

professional circles. It was widely considered a universal key to wise decision

making and widely adopted by business and major institutions. The idea was
to analyze decisions in terms of options, the possible outcomes of choosing
each option, their probabilities and a numerical measure of how much you
value each outcome, its “utility.” In this way, you could calculate an “expected
utility” for each option and then choose the option that would potentially
have the most value for you.
And yet, by the end of the century, ADT had lost its shine, its useful-
ness coming under fire. ADT was no longer the wave of the future. As
with most theories, the devil was in the details. I did not share this blanket
dismissal; my reading was that the ADT logic was sound and that this was
not what was being challenged. Wise decisions conformed to decision theory
norms, but the most useful way to make a decision did not necessarily take
the form of any theoretical model. Other approaches such as intuition and
feedback from real-world decision-making practice might bring the decider
closer to the ADT ideal. Ordinary people could not use the tool, as then
developed, cost-effectively. It was difficult to understand, laborious to imple-
ment, and rarely outperformed common sense. Operational methods needed
to be adapted to fit cognitive capacity and practical requirements. The tool
and its application needed more than logic; it needed psychology and feed-
back from practice. The methodology and its practitioners needed threefold
skills in logic, psychology and practice feedback, rarely found in the decision
making profession.
A highly regarded ADT-based text book by Hammond, Keeney and Raiffa
(1999) features different methodological devices and topics and its contribu-
tion is complimentary, not competing with this book. It expounds difficult
ideas with rare clarity. These authors and I share the same decision theory
perspective. All four of us were part of the Harvard team that originally de-
veloped ADT in the 1960s. However, a distinguishing feature of the present
book is to enhance (rather than replace) the usual decider’s decision pro-
cesses. Together, they could support a single course on prescriptive decision
analysis.
1.2. DISTINCTIVE FEATURES OF THIS TEXT 3

1.2 Distinctive features of this text

• Qualitative counterparts to quantitative ADT models.

• Uses the totality of the decider (D’s) knowledge rather than just what
is called for by a single ADT analysis.

• Exercises students’ real judgments (as opposed to hypothetical or other

people’s judgments used in traditional case studies).

• Illustrates argument with real examples.

• Combines multiple evaluations of the same judgment (“hybrid judg-

ment”).

• Provides real-world illustrations of decision methods.

• Introduces innovative analytical concepts (such as “ideal” judgment).

This text can be primary support for a short course in decision-making,

as part of a variety of programs, such as psychology, management and phi-
losophy. It can complement other decision-aiding texts, notably Hammond
et al. (1999), which shares the same perspective, or “descriptive” behavioral
decision texts, such as Baron’s “Thinking and deciding” (2008).
Chapters are largely modular, and lend themselves to being taught as
self-contained segments. Segments could be selective in emphasis: quali-
tative with or without quantitative treatment; personal vs. civic domains;
factual vs. value judgments; case-studies vs. method exposition; more vs.
less advanced material.

1.3 Vocabulary
The vocabulary here represents a significant modification to prevailing pro-
fessional practice. I have found that students, clients and most others (in-
cluding academics) who have not been indoctrinated in current practice are
commonly confused or misled by much decision science language in common
use. So, I have substituted, for current language, I hope, clearer language,
4 CHAPTER 1. INTRODUCTION

which I have found communicates better. For example, I use “applied de-
cision theory” in place of “decision analysis,” which misleadingly suggests a
generic way of analyzing a decision.
Language has proven to be such an impediment to communication as to
put people off from learning or using modern decision aids. I have painful
memories, from my early consulting days, of presenting what I thought was
the clear analysis of an investment option to a company president. After
listening for ten minutes, he muttered “gobbledygook!” and stormed out of
the room and had nothing further to do with our work. My goal is to be
welcoming and inclusive with the language, and certainly to keep everyone
in the room.

1.4 Historical background

Before the 20th century, major scientific advances oriented toward decision-
making had tended to be descriptive more than prescriptive, focusing on how
the world works rather than how to make it work better. Decision circum-
stances changed slowly from year to year, so that decision practice could take
its time to improve by trial and error. By the beginning of the 20th century,
however, technology and other fields had begun to change rapidly. The life-
and-death perils of poor decisions in World War II spurred the development
of the quantitative decision tools of Operations Research. They were special-
purpose tools (e.g., for locating enemy submarines) that may well have been
decisive in winning the war.
After the War, Operations Research was adapted to industry, with some
success for certain situations. These tended to be where options were complex
and consequences were clearly defined, and involved processes that could be
mathematically modeled (such as in production scheduling and transporta-
tion logistics). Progress in applying quantitative methods to choices involving
a few clear-cut options with messy outcomes was a good deal slower. Anal-
ysis here competed less effectively with unaided humans, and deciders often
did better by backing their own judgment.
The mid 20th century saw the development of general-purpose statistical
decision theory, which can readily adapt to changing circumstances and, in
principle, analyze any choice whatsoever. It does so by quantifying a decider’s
judgments about goals, options and outcomes, however ill-defined, and by
1.4. HISTORICAL BACKGROUND 5

inferring the preferred choice. Its practical application is Applied Decision

Theory (ADT).
In the early 1960s, research groups at Harvard and Stanford developed
and promoted ADT as a universal methodology for improving rationality in
a world where poor decisions were damaging lives and communities. Leading
corporations (like Dupont, General Electric and Kodak), and then govern-
ment departments (like Defense and Energy) began to apply decision analysis
to their most challenging (and controversial) decisions. Many impressive suc-
cesses were reported, and those of us who had been in decision analysis “on
the ground floor” viewed decision analysis with a missionary zeal.
Decision analysis has passed through several overlapping phases, charac-
terized by distinctive modes of aiding, each building on the earlier ones.

• The theory phase laid the foundations of the parent discipline, statis-
tical decision theory (about 1950 to 1970)

• The technique phase focused on specific modeling procedures and sought

illustrative applications (about 1960 to 1980)

• The problem phase selected from among available decision analytic

techniques and adapted them to a particular class of problem, such
as capital budgeting or environmental protection (about 1975 to 1990)

• The use-and-user phase addresses all requirements of useful aid in a

given context, in which the focus is on usefulness to a particular decider
and context.

Actual ADT practice by no means fits neatly into these categories. Their
edges and timings are much more blurred, but they may give some insight into
ADT’s evolution. In some ways, I view this book as a manifesto for a “use-
oriented” decision analysis revolution (rather than technique- or problem-
oriented ADT). It draws equally on logic, people and practice skills (rather
than on logic alone). I believe this development of emphasis can counter the
pressures that have slowed down successful ADT practice in the past. ADT
methodology, though useful as it stands, is still a work-in-progress.
6 CHAPTER 1. INTRODUCTION

1.4.1 ADT methods

At the time ADT was created, it was widely believed, in professional and aca-
demic circles, that any decider could improve his/her decision performance
by acting on the implications of such a model. ADT modeling began to
be taught to deciders-in-training throughout professional education (Brown,
Kahr & Peterson, 1974). It was expected that it was only a matter of time
before ADT would become standard practice in management and other ap-
plied domains. Indeed many of the nation’s major business and government
or organizations began incorporating ADT into their decisions (Brown &
Ulvila, 1982).
However, ADT, as originally and still generally practiced, has since lost
its once-booming interest. Indeed, it is no longer a required course at Har-
vard Business School, where it originated. It has proven of little practical
value, due to three fatal flaws: failure to adapt to human cognitive capac-
ity; apparent cost in time of ADT analyses; and disregard of knowledge not
called for by an ADT model. The action that ADT analysis favors is based
on a single numerical model and largely ignores other sources of wisdom,
such as intuition, others’ advice, and alternative analyses. As a result, ADT
analyses do not usually improve on unaided decisions — at least not enough
to be worth the trouble.
The root cause of these technical ADT problems that impede useful pre-
scription (as opposed to description) is that ADT tools have been developed,
applied and taught by mathematically oriented statisticians and the like,
who lack both relevant psychology training and familiarity with the real-
world contexts. They can check for logical soundness, but not cognitive or
organizational fit, or cost-beneficial balance. Academic career incentives do
not motivate them to do otherwise.

1.4.2 My own ADT evolution

My first job out of college, in 1958, was in management consulting, which
included trying to help clients make decisions in the 1960s. Seeking unsuc-
cessfully some logical discipline to support my advice, I heard of relevant
work on ADT led by statisticians Howard Raiffa and Robert Schlaifer (1961)
at Harvard. I joined their group and spent five years absorbing their ADT
methods, teaching these to MBAs.
1.4. HISTORICAL BACKGROUND 7

When I tried these out on business clients, I was disappointed (as others
were) to find that, in spite of ADT being logically compelling real, deciders
rarely used it or found it useful. I attributed this to the fact that our version
of ADT did not take into account human capacities and limitations.
So I moved to the University of Michigan for the next four years, to learn
from psychologists, led by Ward Edwards, who were describing how peo-
ple make decisions and especially their logical flaws. I found that enhanced
knowledge improved my decision-aiding ability somewhat. I incorporated it
into a decision-aiding course in collaboration with an interested psychologist
and statistician, who complemented my earlier practical decision-airing ex-
perience (Brown, et al., 1974). This variant of ADT was an improvement,
but it still lacked explicit adaptation of decision tools to human capacities.
In 1973, I returned to my original consulting career. I spent the next
two decades aiding professional policy-makers (such as business managers
and government officials), developing new decision tools (often funded by
research agencies), teaching future managers (such as MBAs) and educating
the general public (through the press and broadcasts). I interleaved consult-
ing to practicing deciders and serving on relevant faculties, notably statisti-
cal decision theory (University College, London), behavioral decision theory
(London School of Economics) and management (Harvard, Michigan, George
Mason) and, where appropriate, collaborating with others within them.
By the time I retired from paid employment in the mid-1990s, I had
come to believe that the private decider (the “common man”) stood to benefit
from learning to make wiser decisions at least as much as the institutional
decider. Accordingly, I had begun to re-direct my research, teaching and
applied efforts from professional to private decisions. I set about adapting
my professional experience to improving private decisions, by teaching the
young (and the adults they would become) how to make wiser decisions. This
text encapsulates much of what I learned.
Psychologist Jon Baron and I developed teaching materials and pilot-
taught them in local schools. (See Baron & Brown, 1991.) This experience
confirmed that private deciders needed aid as much as professional deciders,
but in a substantially different form. For example, private deciders do not
generally have to quantify thesir reasoning explicitly, nor validate their rea-
soning to others, which is a key feature of professional decision aiding.
8 CHAPTER 1. INTRODUCTION

1.5 Looking ahead

Digesting the decision principles and tools presented won’t guarantee avoid-
ing the pitfalls that, unaided, intuition and informal reasoning might cause.
But it can move students perceptibly in the right direction, and do at least
as much good as spending the same effort on most other academic subjects
would. It may also give them a general clarity of thought that enhances what
they get from other courses (like understanding Hamlet’s “To be or not to
be” dilemma, in English Literature; or the workings of natural selection in
Evolutionary Biology; or the pros and cons of nuclear energy and fossil fuel
in Environmental Studies). Even when this training does not improve much
on good common sense, it should clarify the underlying logic, make deciders
more confident in their conclusions (when confidence is warranted), and help
explain their reasoning convincingly to others.
Chapter 2

Decision making

In this chapter, I discuss the objectives that I hope this text will meet for
you as a private decider.

2.1 What is a decision?

When you face a dilemma, that is, a tricky situation that may call for action,
you normally proceed in two steps. You make a decision, which is an intent
to act (or not), and you may, or may not, act on that intent. For example,
1 you “decide” to diet, but don’t manage to.
The simplest decision is a choice among a few clearly identified options,
and that is the main focus here. However, the same principles apply to
the common case where there are numerous options, not all of which are
immediately apparent.
Most decisions are made informally, whether intuitively without delib-
erate thought, or based on careful reflection. However, over the centuries
people have recognized the need for better and more defensible decisions and
have tried to develop systematic and structured aids. I will try to advance
that enterprise.

1
A diamond indicates an example, throughout this book.

9
10 CHAPTER 2. DECISION MAKING

2.1.1 Ideal decision

If you were all-wise, you would make choices that maximize the prospect
of your future satisfaction. Satisfaction is an elusive but essential concept,
variously referred to as happiness, welfare, desirability and, when quantified,
utility. For our purposes, it is whatever serves your preferences or values.
You would have achieved ideal wisdom when you have perfectly processed
your entire mind-content, i.e., absolutely everything that you know and feel.
You would make the same decision as you would have by following an impec-
cable decision process, regardless of how well you actually do decide. If you
were such a person, you would not have much use for this book. Fortunately
for those of us who make a living trying to improve decisions, such all-wise
deciders are rare indeed.
Ideal wisdom is not remotely achievable, given your normal cognitive lim-
itations and the current state of the art of logical analysis. We are all, to
some extent, unwise. However, ideal wisdom serves as a distant beacon to-
ward which we can strive. Rationality is the achievement of wisdom through
some deliberate reasoning process, such as I will propose here.
 Reg is a low-wage worker deciding whether to contribute money to
public radio. If he asks himself “what’s in it for me?” he concludes “not
enough” and decides to saves his money. (He happens not to feel guilty
about not “doing his duty” to contribute, even though he listens to public
radio.) Yet he “irrationally” does contribute, because he is “that kind of
person”, i.e., programmed that way, even though it is against his immediate
interests (saving money).
This is a perverse example of a “cognitive flaw.” After all, many of us
consider contributing to public radio to be a decision made largely for the
public good; the perversity is that, based on Reg’s own values, which include
saving as much money as possible, he would act against that perceived good.

2.1.2 Value of wisdom

Much of the time, you feel comfortable about the option you end up choosing
in a given dilemma. However, you sometimes worry that you could have
better integrated what you know and what you want, and thus given yourself
a better chance of meeting your goals. And when you know what to do,
you may still have trouble communicating your reasoning to others whose
2.2. REQUIREMENTS OF WISE ACTION 11

perspective differs.
Muddled thinking — or at least the lack of responsible reflection — is
widespread and may cause serious, but avoidable, harm.
 You may be led to support legislation promoted by special interests
(trade restriction? tax relief?).
 You support (or oppose) health regulations without responsibly trading
off risks and costs.
 You take the first appealing job that comes along. You miss out on a
better option and deprive a more appropriate employer of your talents.

2.2 Requirements of wise action

To act wisely consistently, you need to be good at several things. You must:

• Recognize when some action may be called for.

• Identify promising options.

• If necessary, seek information on those options.

• Choose the best option.

• Act on that choice.

• Follow through effectively.

This book is aimed mainly at helping you with the fourth task – choosing
among options — with some attention to the third task — knowing when and
what information to seek first. The other tasks are just as important, but I
am not addressing them much here. (Reading this and doing the exercises
may confer benefits beyond helping you to act wisely, such as improving your
critical thinking in general.)

2.2.1 Accounting for all available knowledge

A key feature of a wise choice is that it draws on all your knowledge, not
just what happens to be used in any particular analysis. The fact that an
analysis is complex and logically coherent may not produce a choice that is
12 CHAPTER 2. DECISION MAKING

wiser than unaided judgment, if the latter properly draws on more knowledge
— that is, draws on your entire mind-content.
 Before you decide how much to pay for a house, don’t just look at the
cost per square foot; also consult your realtor and check how much similar
houses have been selling for.
 Is it not unknown for a meteorologist to announce only a 70% chance
of rain, while outside his window rain drenches the region.
 Ford Motor Company UK felt they had too many car parts depots
in the London area. A prestigious university Operations Research group
developed a state-of-the-art math model that indicated that only four of
Ford’s existing seven depots were needed. Accordingly, Ford closed three
depots, with disastrous results. The four remaining depots proved completely
inadequate for the demand. It turned out that depot capacity had been
grossly overestimated. The analysts had casually calculated usable depot
capacity as height times length times width, as if the depot were a box that
could be filled to the top. They did not take inevitable dead space into
account, though they would have if they had taken time to think seriously
about it, or checked with a depot manager. As a result, predicting the
outcomes of closing down depots was grossly distorted. The analysts were
high-powered statisticians, with little knowledge of (or, I suspect, interest in)
the nitty gritty of inventory management. They presumably did not see the
need to take all relevant information into account, in order to reach a wise
decision.

2.2.2 Wisdom is no substitute for knowledge

A wise decision depends both on how good the knowledge you use is, and
on how well you reason from that knowledge. Here, we focus mainly on
the second, though it is important to recognize that the first is often more
important.
 If you are deciding whether to take on an unfamiliar room-mate, it
may be more useful to seek more information about her background than to
ponder over the little you already know about her.
 People often mistakenly assume that knowing something about ratio-
nality puts me in a position to instantly give good advice on what to do, when
I have only the sketchiest knowledge of the problem. “Garbage in, garbage
2.2. REQUIREMENTS OF WISE ACTION 13

out” — meaning, using poor information leads to poor decisions — applies

to the most rational people, except that they ought to know better than to
say anything at all.
 Civic example: I was on a radio talk show and a listener called in to ask
me if I thought the US should invade Afghanistan. I explained that unless
I had carefully analyzed and researched the problem, my opinion would be
worth no more than the listener’s, and probably less.

2.2.3 Good outcomes may not imply wise decisions

An unsatisfactory outcome does not necessarily mean your decision was un-
wise — or vice versa. It may be wise to wear a seatbelt, but, against the
odds, a seatbelt could kill you (say, by trapping you under water). Never-
theless, if the outcomes of my decisions are consistently worse than yours, it
is a useful, if inconclusive, indication that you are wiser than me.
 Bachelor Joe example: 2 Bachelor Joe is agonizing over whether to
marry Jane or Lulu. (For the sake of argument, let’s just assume the two
women have given him that choice in a complex love triangle.) In the end,
he marries Lulu, whom he finds more attractive, contrary to convincing in-
dications that, by her character, she would make a terrible mate for Joe —
and so she proves to be. However, they produce two wonderful children, who
make Joe’s life happier than he could have expected with Jane, in spite of
the marital strife that he endures with Lulu, as mutual acquaintances had
predicted. By hindsight, he does not regret his decision to marry Lulu. He
acknowledges later that it was an unwise decision, in the light of evidence
available to him at the time. He just got lucky.
 After Jane is left by Joe, she falls hopelessly in love with Jasper, a
charming, recently divorced man, who is admired by all her friends. They
have a whirlwind romance and three months after meeting, in which they
discover many shared interests, she marries him. He turns out to be an
abuser who makes her life a misery. She may not have acted unwisely in
marrying him. She may have made best use of the misleading information
she had, if her only options were to marry him or not. She just got unlucky.
2
This hypothetical example will reappear throughout this text, often with different
assumptions.
14 CHAPTER 2. DECISION MAKING

2.3 Current decision practice

2.3.1 The world of private decisions
We make decisions all the time and they shape the quality of our lives,
but not always for the better. Most day-to-day decisions, such as what to
have for dinner, are too small to do more than act on intuition, without
aid. However, cumulatively, even these small decisions have an important
impact on our lives. Decision-making is an immense, complex and life-long
undertaking. Improving it, even modestly, is surely as important as, say,
learning to drive or knowing geography.
Over the centuries, people have recognized the need for better and more
defensible decisions and have sought systematic and structured aid. Ben-
jamin Franklin, for example, suggested a useful way of canceling out equiva-
lent pros and cons of options, after making lists of each, until the best option
becomes clear, because what is left is mostly pros, or cons. Such sporadic
approaches foreshadowed intensive efforts, a century later, to develop various
forms of prescriptive decision analysis (PDA), including applied decision the-
ory (ADT) 3 , the logical core of the approach presented here. The practical
use of ADT, by the late 20th century, had penetrated virtually all segments of
professional decision-making (especially business, government and medicine),
so far with mixed results. However, to date, its application to private deci-
sions has been modest (Brown, 2012).

2.3.2 Room for improvement

It is no easy thing to improve on how humans have been making personal
decisions for thousands of years. Natural selection must have winnowed out
the least effective of our forebears.
 The wise caveman who, when faced with a mortal enemy, makes the
right call between fight and flight may live to reproduce another day, outliving
his less wise neighbor.

3
Also known as “decision analysis”, which misleadingly suggests something much
broader.
Another random document with
no related content on Scribd: