Analyzing Decisions Under Uncertainty: Simple Tools of the Heathens

Konstantinos V. Katsikopoulos ()
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Konstantinos V. Katsikopoulos: Centre for Operational Research, Management Science and Information Systems and Centre for Behavioural Action and Research, University of Southampton Business School

A chapter in Behavioral Decision Analysis, 2024, pp 65-79 from Springer

Abstract: Abstract A major obstacle for engaging with standard decision analysis is that one must reduce uncertainty to risk. This chapter contributes to situations where uncertainty cannot be meaningfully reduced to risk. I synthesize findings and perspectives of behavioural scientists who have ventured outside the lab and into the wild. Psychologist Gerd Gigerenzer and colleagues’ fast-and-frugal-heuristics program provides transparent and accurate, simple quantitative rules for laypeople and experts; and the radical-uncertainty thesis of economists Mervyn King and John Kay shows that important organizations and groups can make truly rational decisions by employing rich, coherent qualitative narratives. I speculate on the way forward for these ideas in decision analysis, and more generally connect to “soft” and “behavioral” operations research.

Keywords: Uncertainty; Risk; Fast-and-frugal heuristics; Rich and coherent narratives (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isochp:978-3-031-44424-1_4

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DOI: 10.1007/978-3-031-44424-1_4

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