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Dynamic Economic Decision Making: Strategies for Financial Risk, Capital Markets, and Monetary Policy by JOHN E. SILVIA

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Chapter 1

Dynamic Decision Making

We are what we repeatedly do. Excellence, then, is not an act but a habit.

–Aristotle

Completion of the first transcontinental railroad across the United States, ably told by Steven Ambrose, is a story of a very imperfect success, with numerous changes in how, where, and by whom the railroad was built. While imperfect, the railroad's completion is also a study in the flexibility of decision making where the paradigm of how, where, and by whom was always modified to fit the realities of building the road. Choices were constantly made and then modified on issues of where the track would go, how it would be financed, the construction, and, not to be overlooked, what political strings were to be pulled to get the railroad finished at a profit. Other than completing the railroad, there was not a set of proscribed rules; instead, a framework for decision making was set up, modified with new information, then choices were made and a new model put in place.

Successful decision making is a process, not an event, with constant modifications and interactions among the moving parts that evolve over time. In sports, many franchises win a championship once in a while. Yet repeat championships are driven by a model of decision making that generates winners.1 The focus remains on the correct process that can be replicated over time and across circumstances rather than on a one-off correct decision that is more a matter of luck than skill. Good decision making ...

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