Lack of knowledge, chance, path dependence and ideas for dealing with them

Photo by Dioboss, CC BY-NC-SA 2.0 

There are many uncertain things in the world. Especially, if we consider from the subjective viewpoint of a person. First, she can only know so little about what exists. Second, there is luck. Third, the world is very complex so 'small' choices can lead to big outcomes.

This is the situation we have to cope with and I believe that learning to tolerate uncertainty can be very beneficial. For example, so many good things can happen just because you are in the right place at the right time. Often the cost involved in being at places is so small that it is very worthwhile to try out things and see whether they lead anywhere. In many things there is much more upside than downside potential.

In the survey we conducted with Tommi Pajala (see, earlier post) we saw that people felt uncertainty to be one of the most significant challenges related to their important personal decisions in 2015. In this post I will continue to discuss (what I believe to be) the three major sources of uncertainty: lack of knowledge, chance and path dependence.

I explain these concepts using a simple example. Guy is at a party next to a girl he is attracted to. The girl has already formed an initial impression of Guy. However, as Guy does not know this, he is uncertain about whether he should approach the girl. This lack of knowledge fortunately can be reduced. Guy can, for example, go to a common friend and ask what she thinks.

Lack of knowledge is relevant mainly before one makes his decision. Once Guy has made up his mind and asked the girl for a date, the outcome is out of his control, and will be determined partly by chance. The girl might accept, she might be too busy or maybe she has just met someone else. More generally, I view chance as the kind of uncertainty that we cannot reduce. Throwing dice provides the purest example.

Path dependence is in action after the initial consequences of a decision have taken place.One facet of path dependence is that small decision can set the course of events on a completely different path than if the decision was not made. In the context of our example, it is easy to imagine that, if the girl accepts Guys date proposal (and couple of other things fall into place) the small decision might lead to big things.

What does all of this matter? All the thinking about this topic has led me to the following conclusions:

One should be smart about reducing lack of knowledge. Discovering new information takes up your scarce resources. Prioritize!

Identifying opportunities with little downside and lot of upside potential is particularly useful. This is the case in almost all decisions where you do not need much commitment to find out if things work out or not.

Early steps matter a lot. Small things can lead to big things.

And finally, uncertainty is an unavoidable thing in life. One should not be afraid of it.

Edit (29.4. 21:40): Added "almost" to the third last paragraph.

Seminaari data-analytiikan soveltamisesta

Olen mukana Suomen Operaatiotutkimusseurassa järjestämässä toukokuun lopulla (26.5. kello 13.00 alkaen) seminaaria Data-analytiikka kasvun ja kannattavuuden moottorina. Aihe saattaa kiinnostaa joitain blogini lukijoista. Tapahtuma on opiskelijoille ilmainen.

Itseäni data-analytiikan ja päätöksenteon yhteys kiinnostaa useastakin syystä. Muutama näistä on,

• Data ei tee päätöksiä. Päätöksentekoon liittyy faktojen lisäksi aina päätöksentekijän tavoitteet tai arvot. Arvoja ja tavoitteita on monenlaisia.
• Data voi johtaa harhaan. 
• Kaikesta ei ole dataa, olemassa oleva data voi olla valikoitunutta. Esimerkiksi kurssipalautteessa korostuvat ääripäät. 
• Datan tulkinta vaatii lisäoletuksia. Jos tietty asiakasryhmä kuluttaa tuotetta X määrän Y niin onko tämä paljon vai vähän? Onko parantamisen varaa vai ei?

Tervetuloa!

Decision research perspectives to sustainable consumption

I re-discovered a presentation which I gave at the Aalto Media Factory (my first paid lecturing gig!) in 2012 titled "Perspectives to sustainable consumption from research in behavioral decision making and decision analysis". I went through the material and still found it current so I decided to share it with you.

The presentation is available here.

Ideas and claims about decision making (collected edition)

A collection of ideas and claims published earlier on this blog. Clicking the picture will lead you to the original post.

Obvious solutions have already been found. However, they can be based on assumptions that do not hold. Questioning those assumptions is an effective means to developing new creative solutions.

Being creative at Systems Thinking Applied meeting.

If one doesn't know what she's after, she may well end up in wrong places.

Structure of the system in which one is acting determines the effects of her decisions. What should fundamentally matter, are the consequences to things that one values.

Career related choices are among the most important decisions for young educated people.

Decision making should be value-focused. Structuring values may help at becoming a better decision maker.

Should you make the decision now or delay it? 

Decision trees provide a valuable tool for structuring one's thinking about a decision. The ease of reversing a decision plays a major part in deciding how to deal with electromagnetic hypersensitivity.

Importance is only half of what should count in prioritization. 

Studying while working may enable better learning.

Threats to educational equality in Finland can be analyzed by considering the likelihoods and impacts of those threats.

Questioning assumptions related to basic education might lead to some big improvements in quality of learning!

Some creative value-focused thinking going on in Finland: http://qz.com/367487/goodbye-math-and-history-finland-wants-to-abandon-teaching-subjects-at-school/

Why we do basic education? Because we want our children to learn skills and gain knowledge about different phenomena.

Some people seem to have been thinking about the useful question: Why teach by subject? 

“Finland is considering its most radical overhaul of basic education yet—abandoning teaching by subject for teaching by phenomenon.”

And arrived at some conclusions:

Improve your creativity - begin with why

The obvious solutions to most problems have already been found. However, they are often based on assumptions that do not hold. 

The question 'Why?' is an effective means to questioning those assumptions.

Two main types of assumptions are: 

• Assumptions about values, objectives, goals - the reasons behind doing things.
• Assumptions about how the world works. Whenever you ask “why should we assume that?” or “why is that so?” and do not get a satisfactory response, there might be something wrong with those assumptions.

It’s not hard to create something but it can be very hard to be creative. In the sense, that you would develop something novel, feasible and useful. I believe that using the question 'Why?' more would help us at achieving this creativity.

Illustration:

Question:  “Why should the lecturer use powerpoint slides?”

Response: “Because that is how lectures are given, to give visual learning aid for students, to provide easily accessible course material, to have a structure for what he is going to present” etc.

Q: “Why lectures have to be given that way?”

R: “Ehm…?”

Creativity point: Lecture do not have to be given that way. What is more, giving lectures is actually not an objective at all. It is just one possible way to try and achieve learning.

Q: “Why is it important to give visual learning aid?”

R: “Because it makes learning cognitively easier”

Creativity point: OK. What other means there would be to deliver even better visual learning aid for the students? Could the lecturer use more informative pictures?

People tend to make quick assumptions intuitively and to accept the narrow framing they are given. This might have been necessary in our evolution so that we could survive. However, stepping out of this 'System 1 thinking' might enable you to be more creative.

My advice is to start using the question 'why' more often. Use it until you understand what you are dealing with. After this, you should be equipped to come up with creative solutions.

Me discussing creativity with value-focused thinking at
Systems Thinking Applied meeting in Ruoholahti.

Structuring decisions: Should electromagnetic hypersensitivity be acknowledged as a medical condition caused by electric fields?

I examine the question whether Electromagnetic hypersensitivity (EHS) should be acknowledged as a medical condition caused by electric fields (EFs) or not.

Figure 1 shows my attempt to structure my thinking about this topic using a decision tree technique. In rest of the post, I explain my thoughts about this decision tree. This type of exercise can help to clarifying thinking, to guide collection of facts and to help at communicating the decision. You can find conclusions at the end of this post.

Figure 1: Decision tree about whether EHS should be acknowledged as medical condition or not. Squares are decision nodes, in which a decision can be taken. Circles are chance nodes where one of the states will be realized. Triangles are consequence nodes.

 

Dealing with uncertainty – results from a survey about important decisions people are facing in 2015

Last week, me and Tommi Pajala asked you to respond to a survey. We collected, in total, 22 serious decision problems that people are facing in 2015. Here is Tommi's analysis of the same results.

The main finding is: Career choices are important and they are challenging due to trade-offs and uncertainties. See Figure 1 for a distribution of the decisions by category. The decisions are listed in Figure 2.

Besides uncertainty in consequences, five other aspects that were found challenging are uncertainty in preferences, timing, clarifying objectives and specifying alternatives. In this post you find more about my thoughts on these and what to do about them.


Figure 1: Distribution of the decisions in categories.
Categorization based on my judgment.

Help us to write better and more influential blog posts! Respond to a short questionnaire about important decisions you'll be facing.

I and Tommi Pajala are doctoral students in decision making related fields and like to blog about the topic.

Please help us create better and more focused content by responding to a short questionnaire about the important decisions you will be facing in 2015.

Link to the questionnaire. Responding takes only a couple of minutes.

We will be posting the interesting results later in our blogs. In general, knowing what people consider to be their important decisions will help us focus on the aspects of decision making that might be relevant for them.

Tuomas and Tommi

Thank you!

Should you decide now or later? -- The pros and cons of delaying a decision

The situation where we can make a decision now or delay it occurs basically every day in our personal lives and at work. Two examples are:

• Should I rent the best apartment available at the moment (e.g. a nice two-room apartment at Helsinginkatu) or search for a better one?
• Should we (a team that builds ad campaigns) decide the sub-elements included in the advertisement campaign now, or should we start with some parts and decide about the rest as the overall picture becomes clearer?

These are obviously important decisions and as in any important decisions the rational procedure is to think of the pros and cons of the possible actions. Here the possible actions are ‘make the decision now’ and ‘delay the decision’.

Opiskeluaikaisen työnteon hyöty oppimisen kannalta

Yksilön näkökulmasta kysymys siitä, kannattaako opiskeluaikana tehdä töitä on liian pelkistetty ollaakseen relevantti. Päätös töiden tekemisestä kannattaa miettiä erikseen jokaisen työmahdollisuuden kohdalla. Päätökseen vaikuttaa niin oma tilanne kuin työtarjouksen ominaisuudet.

Yhteiskunnan näkökulmasta taas hyödyt ja haitat opiskeluaikaisesta työnteosta eivät välttämättä ole samat kuin opiskelijan näkökulmasta. Tämä johtuu siitä, että opiskelijat kilpailevat työpaikoista keskenään. Kahden opiskelijan valmistuessa se, jolla on lisäksi työkokemusta, on etulyöntiasemassa suhteessa siihen, jolla ei ole. Yhteiskunnan näkökulmasta saattaisi olla parempi, että molemmat olisivat keskittyneet nopeaan valmistumiseen.

Opiskelijoiden työnteosta on noussut paljon julkista keskustelua juurikin siitä syystä, että yhteiskunnan ja opiskelijan motiivit eivät välttämättä kohtaa. Opiskelijat argumentoivat hyötyvänsä työnteosta ja toisaalta monet väittävät, että yhteiskunta kokonaisuudessaan hyötyisi, jos opiskelijat tekisivät vähemmän töitä.

Teen jaon kolmen vaihtoehdon välillä: Omaan alaan liittymättömien töiden teko, omaan alaan liittyvien töiden teko ja ei töitä. Alla olevassa kuvassa listaan näihin liittyviä etuja.

How are Systems thinking and Value-focused decision making related?

The idea behind systems thinking is to view problems as systemic phenomena. System is a whole consisting of parts and their interrelations.  To effectively solve a problem one must understand the system around it. The better one understands the system, the more capable she is at developing an effective intervention.

The basic idea in value-focused decision making is that decision making should begin by identifying our values instead of our options. We choose between our options to best achieve what we value. Therefore, we should not narrow our thinking to the options given to us, but think creatively about what would be the best ways to achieve the things that we value.

Helping a friend with value-focused thinking

Last spring I simultaneously worked as an assistant for and took the course ’Value-Focused Thinking and Decision Making’ by Professor Ralph Keeney from Duke University who was visiting Aalto University.

One of the homework assignments for the course was to select a good friend outside the class and to have an in-depth discussion with her about her values related to some important decision she will be facing soon. I had my discussion with Kati and it was about her values related to choosing where to work after she would graduate.

I promised to Kati that I would compile the results and later present them to her in a nice format. This took some time but I got it finally done. I thought the resulting material were quite nice so I asked her if it’s okay to share them on my blog. Thanks for letting me do that Kati!

Uhkakuvia koulutuksen tasa-arvolle

Edellisessä blogipostauksessani pyysin vastaamaan kyselyyn, jossa annettiin arvioita erilaisten uhkakuvien todennäköisyyksistä ja vaikutuksista koulutukselliselle tasa-arvolle Suomessa.

Kyselylinkki johti kunkin vastaajan kohdalla satunnaisesti kahteen vaihtoehtoisesta kyselystä. Näissä oli erilainen kyselyformaatti. Tutkin, miten kyselyformaatti vaikuttaa todennäköisyys ja vaikutusarvioiden korrelaatioon. Vaikutusta ei ollut.

Uhkakuvat ja arviointiasteikot muodostettiin melko nopeasti, koska niillä ei ollut suurta merkitystä varsinaisen tutkimuskysymykseni kannalta.* Raportoin tulokset kuitenkin tässä.

Arvioitavia uhkakuvia oli yhdeksän:

Should most effort be put into what is 'most important'?

Everything could be better but we only have limited capabilities to fix and improve things. It is therefore important to ask how should we prioritize our efforts.

One idea you often hear is that we should put our efforts into what are the 'most important' things. What is considered important varies, for instance, finding a cure to a terrible disease is important because many people die from this disease. Fixing some societal problem is important because the problem causes much inequality among people. Developing friendly A.I. is important because evil A.I. could take over the world. Improving our educational system is important because it could have a huge impact on the productiveness of our society.

What is common for all of these, is that the possible benefits from solving the problem are very large. Although prioritization based on possible benefits can sometimes work as the rule of thumb it includes a pitfall: Even if we put a lot of effort into solving the very important problem, it might be that the problem won't be solved or the state of the world improves only very little.

Taking importance into account is a good start but including a second factor will greatly improve our prioritization ability.

Knowing what you want to stop wasting your time

Imagine that you would have no idea of what you want.

You would be choosing at random! 

The case for knowing what you want (the first cornerstone of good decision making) is simple: the reason for doing things is to get what you want. 

1+1=2, kannattaako Natoon liittyä?

Kannattaako Suomen liittyä Natoon? En tiedä, mutta olen eri mieltä seuraavasta presidentti Sauli Niinistön väitteestä: "Nato-jäsenyyskysymystä ei voi arvioida vain plussia ja miinuksia listaamalla, ikään kuin taulukkolaskentana.” (Suurlähettiläskokous 26.8., lähde: hs.fi).

Four cornerstones of good decision making

Apart from things out of our influence, the consequences of our actions (and omissions) determine how good our lives are. Probably most of our actions are based on routine and instincts. However, many are based on our conscious decision making. Some of these decisions are small, such as what do you choose to have for lunch today, but some are big, such as what education you want to pursue or whether you want to invest your time on writing a blog.

I am a PhD student in Systems Analysis and Decision Making. I created this blog to share my ideas about how to make better decisions to live better lives and to make the world a better place. In this post, I will explain what I see as the four cornerstones of good decision making.