Analyzing decisions under uncertainty: simple tools of the heathens

Katsikopoulos, Konstantinos V. (2024) Analyzing decisions under uncertainty: simple tools of the heathens. In, Federspiel, Florian M., Montibeller, Gilberto and Seifert, Matthias (eds.) Behavioral Decision Analysis. (International Series in Operations Research and Management Science, 350) 1 ed. Springer Cham, pp. 65-79. (doi:10.1007/978-3-031-44424-1_4).

Record type: Book Section

Abstract

A major obstacle for engaging with standard decision analysis is that one must reduce uncertainty to risk. This chapter contributes to situations where uncertainty cannot be meaningfully reduced to risk. I synthesize findings and perspectives of behavioural scientists who have ventured outside the lab and into the wild. Psychologist Gerd Gigerenzer and colleagues’ fast-and-frugal-heuristics program provides transparent and accurate, simple quantitative rules for laypeople and experts; and the radical-uncertainty thesis of economists Mervyn King and John Kay shows that important organizations and groups can make truly rational decisions by employing rich, coherent qualitative narratives. I speculate on the way forward for these ideas in decision analysis, and more generally connect to “soft” and “behavioral” operations research.

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