Theme #1: Risk Tolerance
The game show host is standing next to you on the stage, saying: "You have $30,000. You can keep the money or decide to play and possibly lose it all. Behind one of these three doors is $100,000. If you choose the wrong door the $30,000 stays with me. If you pick the right door, you have $130,000." Do you do play or walk away?
Risk Aversion and Risk Tolerance are two factors that affect how we make decisions. Decisions that involve uncertainty means a desired outcome may not actually result. Risk tolerance is dependent on what is at stake and varies with one's risk tolerance. When risk is understood and there is a willingness to accept that risk the decision-making process can be more effective.
Risk can often play into the effect of the bias factors. For instance, Outcome Bias, judging the outcome rather than how the decision is made, may play into taking a risk you might not have taken if the process had focused the decision. Choosing to play the doors in our scenario above or choosing to drive while drunk are good examples of the interaction between risk assessment, outcome bias and decision making.
(The below article can be accessed in the UMUC Library)
- Jarrett, E. L. (2000). The role of risk in business decision-making, or how to stop worrying and love the bombs. Research Technology Management. 43(6), 44-46; Retrieved from JSTOR Journals Database.
Theme #2: Technology
Technology and its Influence on Decision Making
"Information is a source of learning. But unless it is organized, processed, and available to the right people in a format for decision making, it is a burden, not a benefit."
William Pollard
Disruptive technology can render business decisions ineffective almost overnight while data collection can offer more creative alternatives in decision making but also brings decision making into peril with an overload of information or poor management of data.
The story of Blockbusters is not unusual in today's business environment. It is incumbent that our business decisions lay a constant watch on technology. Failure to so do is at a company's own peril.
Data Mining, the Cloud, and the Internet have all provided the avenue to increased availability of data that makes for more creative options in our decision-making process and conversely a more difficult job because of the vast task of sorting through the data. Amazon and Uber are examples of successful companies who use data to drive decision making.