Introduction to Decision Analysis, BITS Pilani

BITS Pilani
Pilani Campus

Decision Analysis ZG535

The premise
Lecture 2
 Introduction to Decision Analysis, BITS Pilani

Myths

• Decisions are made in boardrooms - Tacit knowledge

• Decision making follows a linear pattern - Know what you don’t know
• We make good decisions when we are not influenced by emotions -
Phineas P. Gage case
• Smart people make good decisions - Brilliant Blunders

2
 Introduction to Decision Analysis, BITS Pilani

The way we decide The way we think we

should decide
Descriptive Normative
 Introduction to Decision Analysis, BITS Pilani

1
Thought 4 Action 3
2
 Introduction to Decision Analysis, BITS Pilani

Personality 1. Speed
Preferences

2. Comfort
External factors 3. Cost
1. Rush
2. Traffic


Decision

Alternatives Values,
Resources
1. Public transport
2. Bike
3. Car

 Introduction to Decision Analysis, BITS Pilani

A decision can be defined as a ‘choice’ between two or

more ‘alternatives’ that involves an ‘irrevocable’
allocation of ‘resources’ A mental commitment or
intention is not a decision

Resource Decision
Intent
commit
 Introduction to Decision Analysis, BITS Pilani

A decision that gets the expected outcome is a good decision – Statistician's

1
world.

A decision that gets the highest favourable outcome is a good decision –

2
Politician’s world.

A decision that beats the competition and helps lead the market is a good
3
decision – Strategists’ world.

4 A decision that is rationally taken is a good decision – Westerners’ world.

5 There is nothing called good or bad – A scientist’s world.

6 Sorry, I am confused – An engineer’s world.

I have written a best selling book that is794 pages, please read it – A
7
philosopher’s world.
 Introduction to Decision Analysis, BITS Pilani

Reach home He is
Stay back
safe fortunate
Quality of
Decision Quality of
Drive under MeetOutcome
with an
influence accident Bad luck
 Introduction to Decision Analysis, BITS Pilani

Is this not counter intuitive?

Should we not be looking at the result

while making a decision?

Have you or others judged

your decision based on its outcome?