Guide to Decision Making: Getting it More Right than Wrong
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A comprehensive look at decision-making practices and what can be done to eradicate errors
Designed to help companies in any industry make fewer mistakes, The Economist Guide to Decision Making is an in-depth look at the tools and techniques for preventing errors and improving efficiency. Exploring how and why decisions go awry in the first place; what decision-makers can do to counter the psychological, social, and other forces that can undermine individual judgment and pull organizations off course; and highlighting often overlooked aspects of the science of decision making, the book illustrates how mistakes really happen so that they can be better avoided.
Drawing on examples taken from companies around the world, including Motorola, EMI, and the London Stock Exchange, as well as gold mines in South Africa, and food contamination scandals in China, The Economist Guide to Decision Making thoughtfully considers how companies can be more effective and improve their decision-making strategies.
- Presents new ways for companies to improve their decision-making processes
- Explains how decision-making works and discusses the tools available for helping reduce the likelihood of errors
- Draws on examples taken from companies around the globe
Decision making can never prevent mistakes entirely, but a better understanding of how to improve practices and processes is invaluable for companies looking to increase their overall efficiency. The Economist Guide to Decision Making leads the way.
decision-makers to “put up the money and roll the dice”. Yet there is no need for firms to learn the hard way. The starting point is to distinguish between a mistake made amid the fog of war and a systematic error of judgment. We can do nothing about the fog of war. But systematic errors are avoidable. This book is about why systematic errors are made, how they result in bad decisions and how to make better decisions. Predictable surprises Failure frequently takes firms by surprise. Lehman
received a knighthood. Even so, he remained cautious. He thought that the worst thing that could happen to the bank would be to become part of the City establishment. Establishment status, he said, creates a temptation to become lazy, self-satisfied and complacent. Yet Warburg probably understood the advantages too. Establishment status implies trust. Trust speeds up the conduct of business because it enables parties to take mutually beneficial shortcuts such as verbal contracts knowing that the
paperless settlement. Although it was generally agreed that the project was urgent, the City spent two years arguing over the design. The trouble was that all the various stakeholders, banks, custodians, registrars, retail brokers, institutional brokers and so forth had different ideas. The discussions became so complicated that committee meetings were dubbed “the Mad Hatter’s tea party”. Since no one would give way, the LSE tried to please everyone. As a result the design for TAURUS became
decision, participants could divide the money between the two divisions as they saw fit. Again written justification was required. When the results were fed back, half of group 1 learnt that the divisions are now profitable, and the other half learnt that profits had fallen and their decision had failed. In contrast, group 2 took part only in the second allocation decision. Participants did not decide which division to support initially, but were told that someone else had made the decision.
participants, the value of the prize declined slowly; for others it declined more rapidly. All participants were free to stop the game and take the $2.40 stake money lying on the desk – but only if they acted during the first three minutes. After that time, the value of the stake money also declined. In fact, there was no dictionary. Yet 87% of participants stayed beyond the three-minute deadline when they could have left with a small profit. More than half remained beyond breakeven point, that