A632.1.4.RB - Multistage Decision-Making

When making decisions, I feel that I generally follow a similar method of thinking as discussed in the Wharton (2001) text.  While I had some difficulty following the mathematical problem used to solve the dilemma at hand, the general idea I understood.  I believe it is important to weigh both sides of the decision and look at both long and short term goals when determining a choice. 

The text discusses 2 steps to take before beginning the algorithm to solve the problem.  The first is to accumulate knowledge and the second is decision policies.  Our class discussion this week we watched a talk by Dan Gilbert on why we make bad decisions.  In his talk, he discussed the same algorithm mentioned the Wharton text.  Gilbert pointed out why these types of mathematical equations are beneficial for helping us make better decisions.  He provided excellent examples as to the types of bad decisions we make without even realizing that we are making them.  For me, I feel that I follow a similar rational way of going about making a decision, but after watching Gilbert’s talk, I realized that I make a lot of bad decisions based on irrational reasoning.  My decisions are not consistent throughout my average day or week.  They change given the situation at hand, which is where I struggle as a decision maker.  Using a formula can help to make important decisions more consistent with the method of thinking we all have.  We all come from different backgrounds and different memories that can affect the way we go about making decisions and using the method discussed in the Wharton text can help make those decisions easier for us to incorporate into our problems. 

The idea the Wharton text provides is simple.  “It illustrates a form of logic that is used to solve a wide variety of far more complex problems in dynamic decision making.” (Hoch, Kunreather &Gunther, 2001)  By understanding the given elements to the problem at hand, values and probabilities, we are in better shape for figuring out the answer, also referred to as dynamic programming.  Utilizing this method can help to eliminate unnecessary variables that can altar our perception of our options.  This could help in many ways, as our future decisions and planning would be based on a set of values and probabilities that are not swayed by our own perceptions.

References

Gilbert, D. (n.d.). Why we make bad decisions. Dan Gilbert: Why we make bad decisions. Retrieved October 23, 2014, from http://www.ted.com/talks/dan_gilbert_researches_happiness

Hoch, S. J., Kunreuther, H., & Gunther, R. E. (2001). Wharton on making decisions. New York: Wiley.