Decision Tools to Keep You on the Right Path
Suppose you have a big decision to make, like investing in a project in a context of highly uncertain market conditions. Tools such as decision diagrams can help managers to structure problems, carefully consider alternatives and calculate the risks involved. This article shows how to use decision trees and expected value to improve your decision-making processes. However, don't be fooled into thinking that applying a "scientific" process will guarantee success. Drawing on several well-known studies and experiments used in his classes, the author shows how managers need to watch out for human biases that make our seemingly rational decisions far from infallible. He suggests a number of practical strategies for limiting the influence of these biases on decision-making, both at the individual and organizational levels.