Guided decisions processes

The heuristics and bias research program has convincingly demonstrated that our judgments and choices are prone to systematic errors. Decision analysis requires coherent judgments about beliefs (probabilities) and tastes (utilities), and a rational procedure to combine them so that choices maximize...

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Bibliographic Details
Published inEURO journal on decision processes Vol. 1; no. 1-2; pp. 29 - 44
Main Authors Baucells, Manel, Sarin, Rakesh K.
Format Journal Article
LanguageEnglish
Published Berlin/Heidelberg Springer-Verlag 01.06.2013
Springer Nature B.V
Subjects
Behavioral decision theory
Business and Management
Decision analysis
Decision making
Expected utility
Management Science
Operations Research
Operations Research/Decision Theory
Optimization
Organization
Original Article
Problem solving
State laws
Studies
United States > US
Narrow bracket
Multi-attribute decisions
Decision analysis
Insurance
Behavioral decision making
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Summary:The heuristics and bias research program has convincingly demonstrated that our judgments and choices are prone to systematic errors. Decision analysis requires coherent judgments about beliefs (probabilities) and tastes (utilities), and a rational procedure to combine them so that choices maximize subjective expected utility. A guided decision process is a middle-of-the-road between decision analysis and intuitive judgments in which the emphasis is on improving decisions through simple decision rules. These rules reduce cost of thinking, or decision effort, for the myriad decisions that one faces in daily life; but at the same time, they are personalized to the individual and produce near optimal choices. We discuss the principles behind the guided decision processes research program, and illustrate the approach using several examples.
ISSN:2193-9438
2193-9446
DOI:10.1007/s40070-013-0003-8