Decision-making and Valuation. Methods, Models and Theories

└► Editor (Netherlands)	Optimism in Making Decisions	"Interesting question Herman... I believe multiple reasons / mechanisms are involved. One is because of organizational pressure (only the best proposals make it, so we present our projects overoptimistic, groupthink). Another thing is we know that quite often in (organizational) cultures optimists are being regarded and rewarded higher than pessimists (tough-guy macho culture). Thirdly, our brain may be fooling us (cognitive bias). For example the bandwagon effect and being overconfident about our ability to control outcomes. There could be quite a few more I suspect?"
└► Joe Boyle (USA)	Optimism and Decision Making	"Herman - it does have an effect - and can skew results - people will see what they want to see. Also, how you see your future will affect the future. Can you let data drive the decision-making process? It's not easy."
└► Lilyana Dewie (Indonesia)	How Does Optimism Influences Decision Making	"To make a good decision, we really need optimism, focus and energy. With optimism we can gather facts and data, even when it's quite difficult. Then look for the causes, and finally present alternative solutions."
└► Daniel Latch (USA)	Optimism <= Perceptions of Challenge and Ability A/C=O	"In response to Ms. Dewie, I wonder how you feel about this: "To make a decision good, we really need optimism, focus, and energy". and: "To make a good decision, we really need to understand the challenge or intended outcome and what it takes to achieve it". Optimism may be described as the emotional or energy component of the relative distance and direction of energy flow between one's perceived ability to effect an outcome and one's perception of the challenge involved in doing so. This is a central precept of the change grid which is used for decision making, strategic planning, problem solving, and a host of uses. See it at targetingchangeworks dot com."
└► Jean-Francois Landre (Canada)	Optimism Influence on Decision-making	"Optimism can negatively influence decision-making through biases in judgmental heuristics such as memory retrievability, presumptions, delusions or misconception of probability rules. In such circumstances, the decision-maker (DM) might be convinced that his decision-making process (DMP) is flawless while in fact, it is not. Optimism can positively influence a well balanced DMP, whereas the DM will make decision under uncertainty, with a thoroughly measured risk perspective and a solid knowledge of his intangible assets, such as staff capabilities and competence. So, what does optimism has that pessimism has not? Pessimism triggers higher levels of stress which in turn generates clinically identified neurophysiological effects: decreased memory, decreased cognitive capabilities and decreased physiological stamina. So, even as optimism does not prevent decision-making biases, it does not bring a wide array of intrinsic physiological deregulations that decreases intellectual capabilities."
└► Prasad Sn (India)	The Basis of Optimism	"Decision making based purely on optimism may lead to disaster. Optimism as a result of confidence in your own abilities, training and knowledge of similar, earlier situations may lead to successful decision making. Further, when you have the ability to foresee the reactions of the other people involved in achieving success which is a result of that decision making, optimism is justified and will lead to success. We can safely say that you should "plan like a pessimist, hope like an optimist and make your decisions like a pragmatist"."
└► Arne Antos (USA)	Good Decision Making Drives Optimism	"I think the reality is that good decision making drives optimism."
└► Marcel Wiedenbrugge (Netherlands)	Optimism and Decision Making	"Instead of optimism I would prefer to use the word realism. At the end of the day, in business optimism is important, but it must always be linked to money. For example: in sales you may be optimistic to score a deal, but what sense does it make if you find out afterwards that your new customer is not able to pay you? In other words, if you had checked your customer on creditworthiness in the first place, you may had made the decision to stop wasting time and search for better opportunities."
└► Henry Lozada (Puerto Rico)	A Predetermined Optimistic Emotional Attitude	"A predetermined optimistic attitude (emotional) makes the decisions more easy and fast to make. However, you can lose perspective or the reality of the environment and not see or be aware of overlapping possible consequences, either positive or negative (adverse). My recommendation is that when a manager has certain feelings or situations predetermined (emotional), he should consult with his contemporary peers or professionals. He will then be in a better position to make wise decisions or take calculated risks."
└► Daniel Ebbers (Uganda)	Optimism	"To suggest optimism is to assume pessimism. This means that the decision is being made in the face of uncertainty; the absence of backing knowledge aforethought. Therefore even when the likely consequences are predictable, we hope for the best. This is the only way market leaders are made since even when there are negative effects of the decision, the leader is able to mitigate them in a shorter time than the followers, because of the proximity to first hand information."
└► Ahmed Mahmoud Ahmed Abdo (Egypt)	Need for Optimism Depends on Decision-making Area	"It depends on the kind of decision. The kind of decision helps a lot in being optimist or pessimist. I.e. data, knowledge, experience, pre-studies, etc. are very critical in deciding within the areas of medicine, military, engineering, etc. Because any mistake means death. So these are fields that refuse people being an optimist. While there are other areas in which it help being an optimist. Still in the field of business (commercial) loss of money is much more acceptable than the loss of souls, because it is the person who brings money."
└► Abobaker M (Malaysia)	Optimism is not Enough	"Although optimism is important, decision makers can not rely on it alone. Optimism will encourage them to take the decision but it is not enough to make good and successful decisions, if there is no other information derived from other systems such as cost accounting system which serves decision makers in several ways, we need optimism in decision making but not alone. Therefore, optimism and information together will help decision makers taking successful decisions."
└► Jennings (Netherlands)	Pessimism Can Also be Helpful in Decision-making	"For me optimism is linked to a person; optimism is a skill. It is not linked to a subject or decision. Even though you need positive energy and drive that could come from optimism. For good decision making you should look broader and overlook all the possible alternatives. First decide what the 5 main issues are concerning the subject, then make future scenario, based on worst case and most optimistic presumptions. For the worst case scenario pessimism can also be a great help! Then include the highest feasible outcome trying to include the outcome of both angles."
└► Fariborz (Iran)	Optimism Yes But Over-confidence No!!	"Decision making is an important task that influences many things in the future. Generally speaking, a decision maker should be optimistic, what is the point for making a blurred & vague decision!? Optimism is in fact the fruit of knowledge, experience, proper management as well as other positive factors such as fairness and courage, in other words optimism would help and support decision making. On the other hand we should not close our eyes towards negative aspects of being too positive which is in fact being over-confident. This negative quality could bring wrong ideas, incorrect perceptions and of-course at the end of the day unfavourable results for the decision maker."
└► Schircks, Arnulf, Dr. (Switzerland)	Optimism as Ingredient for Successful Decision-making	"1. Optimism is an ingredient in business (lots of research incl. India prove it) 2. We measure optimism on a scale 1-10 with WOPI and compare with risk-taking values 3. Then we take team-consensus decisions with six thinking hats (creative speedthinking) transforming optimism to innovation with risk-management."
└► Salvatore Decarlo (USA)	Optimism and Common Sense	"Optimism has to be based in reality. If we are optimistic while acknowledging the reality of the desired outcome, we will be able to recognize available resources and more effectively use them in achieving our goal. Unfortunately, people such as the victims who were taken in by the recent securities mega-scams were optimistic. They expected extraordinary returns on their investments. Also unfortunately, they were not realistic and many lost their investments, some of which were significant. Optimism has to be tempered at both ends of the spectrum so opportunities are not missed and resources are not squandered."
└► Roe (USA)	Optimism vs Wishful Thinking	"I think optimism and wishful thinking should be explored here. Good managers will be chosen on the basis of being able to transform pessimism in the workplace with a balanced approach of focusing on what can be done (realism) and an eye for the future goals. Pessimism and cynicism abounds based on past project experience. Managers pick project leaders who have a clear vision of what needs to be accomplished and who to select that can be positive, optimistic and goal focused. No one will bring a project to success if the round table discussions are negative and pessimistic. Its doomed from the start. Managers must have a way to combine optimism, leader selection and a good dose of salesmanship to make any project work."
└► Thupalli Ravindra Reddy (India)	Optimism Gives a lot of Energy	"Having optimism will itself give lot of energy in making good decisions. Good decisions lead to good & positive results. By being optimistic, many negativity factors will vanish like people stop thinking why should I do this? Once employees accept the organisational calls positively they work with thei full heart while implementing the strategies."
└► R. C. Natarajan (India)	Optimism Makes One Lower the Guard	"Optimism in the context of inter-personal relationship makes one lower the guard. My research shows that the principal's trust - a form of optimism - in his agent makes the former show a lower tendency to monitor the latter both (a) for preventing the latter's opportunism; and (b) for assisting and helping the latter to perform better. There is a subtle difference noticed: in the context of (a) shown above, the tendency was less than in the context of (b)."
└► Sahir (Malaysia)	Optimism part of Emotional Intelligence	"I agree with Jennings. Decision making is a skill. As a decision maker, we can study the history before implementing strategies for better results. And don't forget with personal emotional intelligence (EQ)."
└► Victoria G. Axelrod (USA)	Use Prediction Markets	"Prediction Markets have been quite successful as an organizational tool, particularly in the decision making process for new products and services selection. PMs smooth out the bias of over optimism by tapping insights of those in the organization with the most direct knowledge. PMs also enable participation of employees who might not usually be part of decision making process due to hierarchy or politics."
└► Tony Gosling (UK)	Avoiding Optimism in Decision Making by Top Guys	"I think there is an optimism bias in many decision making processes. For some decisions in some sectors this is fine. I work on major defence procurement and support decisions and getting these wrong can destroy your company or lose $billions of taxpayers money. There is a long history of deliberate optimism bias to get programmes going that wouldn't start if people knew the true cost. Realistic decision making in these situations is important but often the incentives for the guys at the top are to be optimisting then move on before the shit hits the fan. If decision makers want decent numbers, without optimism bias, the solution is to build uncertainty into the decision making numbers, use a wide range of estimate sources, refuse to believe that "this time we will do it better" and get independent scrutiny of the numbers."
└► Zeb O. Waturuocha (India)	Optimism in Decision-making is Like Two Sides of a Sword	"Optimism in decision making is like two sides of a sword where each side is sharp. Optimism in decision is full of assurance, which may not be real."
└► Jeff Wilson (USA)	Optimism in Decision Making is a Matter of Mindset	"Think of it this way - what is your mindset? A. Life is a test, therefore avoid looking foolish which breeds a fear of uncertainty, and avoidance of new experiences and a narrowing of your repertoire. Or B. Life is a journey of learning, therefore embrace uncertainty and seek out new experiences. You will then broaden your repertoire. One is a fixed mindset where the later is a growth mindset. It is clear what decisions each will make."
└► Leonard Kambona (Kenya)	Decision Making Must Be Guided by Informed Optimism	"Some decisions require motivation to carry through since bias in decision making may result from incomplete conceptualization of all factors affecting a particular decision. Though pessimism may be a prerequisite for offering controls on optimism-driven decision making, optimism and pessimism are mutually exclusive and have the disadvantage of rarely dwelling in the same mind / heart in equal proportions. The search for solutions to problems requires optimism that the solution can be found and therein lies the psychological mix."

└► Georg (Deutschland)	Forget it!	"I doubt if this going to work for most firms. Most top managers are too proud, heroic or even arrogant to organise criticism on their decisions, although I can see there might be benefits for their firms and themselves."
└► S Ramanathan (India)	Decision Making	"Decision making is a complex process. It calls for a judicious selection of one of the several alternative courses of action by applying an appropriate management accounting technique."
└► Xiaomarke (China)	Try to Use 6 Thinking Hats for Decision Making	"When we are doing the decision making procedure, we would prefer to use the 6 thinking hats tool for finalizing the best choice. It will involve pessimism and optimism. Also innovative solution and facts will be reviewed many times."

└► Leo1 (NZ)	Decision-making	"I agree it's about gut feel and knowing your Values."
└► Brendan Dunphy (France)	Gut feeling Approach	"And how do you think Dale we develop our 'gut feeling approach'? It may seem that it is instinctive but in reality it has developed over time and as a result of much conscious and unconscious self-analysis, observation, questioning etc. To deny 'rational decision-making methods' for managers (or anyone else) can only serve to lessen our ability to make better decisions 'instinctively' when we need to."
└► Paul Ward (USA)	Rational decision making!	"I hope I never work at a company that believes only in gut feeling approaches to decision making, and eschews rational decision-making models. One of the key contributions of management theory, and Kahneman's work, is that we can know our biases at some level, so that we can make better decisions. Complexity isn't just about things being complicated. It's about how something qualitatively different from the basic dynamics of the system emerges from that system. If a manager just stays within the system and never looks at what is emerging, and why, that manager is, as they say, toast. I'd be very interested in seeing Barbara's and Dale's Myers Brigg Scores. MBTI is a perfect example of identifying biases ..."
└► Andrew Smith (Philippines)	Rational Decision Making	"I think the Gut Feeling Approach is only applicable for a situation where you need "a right away decision" or an unexpected situations that needs an immediate decision. However, i want to emphasize what Mr. Warren Buffet said "I put a heavy weight on certainty. If you do that the whole idea of a risk factor doesn't make sense to me. Risk comes from not knowing what you are doing""
└► Ivan Lax (UK)	Rational Decision Making	"I think it is more about helping groups understand why they make the decisions they do or how they arrived at them. We deploy Multi Criteria Decision Analysis using Decision Conferencing and the value of this is in the social interaction and the breaking up of complex decisions into their component parts. In essence it utilises a lot of gut feel but at least we understand what is driving our gut the most!"

└► Ed (USA)	Gut Level Values	"This was from Morris Massey, available from CRM video, it is 2 1/2 hours long, he was a consultant and professor from University of CO...and in the 1980s this was the landmark stuff on values, recognition and teambuilding!! I think the models all have a place, but recognize that most corporations are demanding decisions and a hurried exec may not have time to consider their process let alone all the parameters of a decision. That is why they need us OD types ....to slow them down to a more systematic, conceptural process-driven behavior! BTW I am ENFP....lol"
└► jan.hann (usa)	Morris Massey	"He also has a new video - available from Carlson Learning"
└► Kelley (USA)	"You are who you were when"	"Hi, My father has spoken of this video so many times. He is 76 years old and was working for Union Carbide" when he saw it. The video made a lasting impression on his life and he has referenced it numerous times. He mentioned it again tonight 9-3-09. I am a psychotherapist and I would LOVE to see/own the video. Did you have any luck finding it? From the website I am on, I can't tell when you posted your comment. I just hope you are still checking it.... I would be forever grateful to anyone that has access to this video. Actually, it was probably a movie when it was shown. Thanks, Kelley "
└► Daan Groeneveldt (South Africa)	Values and Decision Making	"Ronnritt - USA: the video is 'What you are is where you were when" by Dr Morris Massey - it is a very realistic analysis of value creation and decision making. It was used extensively by many multinational organisations in South Africa towards the end of apartheid. A Google search is worthwhile."

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