Handbook of Decision Analysis

CHAPTER TWO

Decision-Making Challenges

TERRY A. BRESNICK and GREGORY S. PARNELL

Two Perspectives on Decision Making

Nothing is more difficult, and therefore more precious, than to be able to decide.

—Napoleon, “Maxims,” 1804

Nothing good ever came from a management decision. Avoid making decisions whenever possible. They can only get you in trouble.

—Dogbert, Dogbert’s Top Secret Management Handbook, 1996

2.1 Introduction

2.2 Human Decision Making

2.3 Decision-Making Challenges

2.4 Organizational Decision Processes

2.4.1 Culture

2.4.2 Impact of Stakeholders

2.4.3 Decision Level (Strategic, Operational, and Tactical)

2.5 Credible Problem Domain Knowledge

2.5.1 Dispersion of Knowledge

2.5.2 Technical Knowledge: Essential for Credibility

2.5.3 Business Knowledge: Essential for Success

2.5.4 Role of Experts

2.5.5 Limitations of Experts

2.6 Behavioral Decision Analysis Insights

2.6.1 Decision Traps and Barriers

2.6.2 Cognitive Biases

2.7 Two Anecdotes: Long-Term Success and a Temporary Success of Supporting the Human Decision-Making Process

2.8 Setting the Human Decision-Making Context for the Illustrative Example Problems

2.8.1 Roughneck North American Strategy (by Eric R. Johnson)

2.8.2 Geneptin Personalized Medicine (by Sean Xinghua Hu)

2.8.3 Data Center Decision Problem (by Gregory S. Parnell)

2.9 Summary

Key Terms

References

2.1 Introduction

In this chapter, we describe decision-making challenges and introduce some reasons why decision analysis is valuable to decision makers, but ...