A Pyramid of Decision Approaches

Prietula M.J. Simon H.A. , “The Experts in Your Midst,” Harvard Business Review (January/February 1989), pp. 120–124.

Hoffman P. J. Slovic P. Rorer L.G. , “An Analysis-of-Variance Model for Assessment of Configural Cue Utilization in Clinical Judgment,” Psychological Bulletin, 69 (1968): 338–349. To arrive at 23%, we took the reported mean infra-export correlation of .76 and calculated the chance of getting a reverse opinion between two cases from one time to the next. In general, a correlation of r translates into a [.5 + arcsin(r)/π] probability of a rank reversal of two cases the second time, assuming bivariate Normals [see Kendall M. , Rank Correlation Methods (London: Charles Griffen & Co., 1948)].

Russo J.E. Schoemaker P.J.H. , “Managing Overconfidence,” Sloan Management Review, 33/2 (Winter 1992): 7–17.

Ebert R.J. Kruse T.E. , “Bootstrapping the Security Analyst,” Journal of Applied Psychology, 63 (1978): 110–119.

Correlation is a statistical measure that ranges from + 1 (perfect agreement) to 0 (no agreement) to – 1 (complete reversal).

Payne J.W. Bettman J.R. Johnson E.J. , “The Adaptive Decision Maker: Effort and Accuracy in Choice,” in Hogarth R.M. , ed., Insights in Decision Making (Chicago. IL: The University of Chicago Press, 1990), pp. 129–153.

Dawes R.M. Corrigan B. , “Linear Models in Decision Making,” Psychological Bulletin, 81 (1974): 105.

See Saaty T.L. , The Analytic Hierarchy Process (New York. NY: McGraw-Hill, 1980).

Dowey J. , “Pinto Madness.” Mother Jones, 18 (September/October 1977).

Wainer H. , “Estimating Coefficients in Linear Models: It Don't Make No Nevermind,” Psychological Bulletin, 83 (1976): 213–217. Nonetheless, cases exist where the choice is sensitive to the exact weights. In our own research [ Schoemaker P.J.H. Waid C.C. , “An Experimental Comparison of Different Approaches to Determining Weights in Additive Utility Models,” Management Science, 28/2 (1982): 182–196], we found that the different methods often do yield different weights but that the choices or predictions resulting from those weights are usually not significantly different.

Ebert Kruse , op. cit.

Dawes R. M. Faust D. Meehl P. , “Clinical versus Actuarial Judgment.” Science, 243 (1989): 1668–1673.

Of the 15 studies listed in the table, seven showed a statistically significant (p<.05) difference between intuitive performance and the model. Since both correlations involve the same target variable, a z-test for correlations from dependent samples was used. The fact that 14 of the 15 studies show a positive bootstrapping effect (and none are negative), is itself highly significant under an exact binomial test.

Dawes Corrigan , op. cit.; Einhorn H.J. Hogarth R.M. , “Unit Weighting Schemes for Decision Making,” Organizational Behavior and Human Performance, 13 (1975): 171–192; Wainer , op. cit.

Blattberg R. Hoch S. , “Database Models and Managerial Intuition: 50% Model + 50% Manager,” Management Science, 36/8 (1990): 887–899.

Franklin B. , “Letter to Joseph Priestley,” 1772, reprinted in The Benjamin Franklin Sampler (New York. NH: Fawcett, 1956).

Keeney R.L. Raiffa H. , Decisions with Multiple Objectives (New York, NY: Wiley, 1976); Keeney R.L. , Value Focused Thinking (Boston. MA: Harvard University Press, 1992).

Keeney R.L. Lilien G.L. , “New Industrial Product Design and Evaluation Using Multiattribute Value Analysis.” Journal of Product Innovation Management, 4, (1987): 185–198.

Boyer R. Savageau D. , Places Rated Almanac (New York. NY: Prentice-Hall, 1984).

Hershey J. Kunreuther H. Schocken S. , “Integrating Prescriptive and Descriptive Analyses Using A Computer-Based Decision Support System,” Working Paper, Department of Decision Sciences, The Wharton School, University of Pennsylvania, April 1984.

Of course, we don't know for sure that the MAU method indeed identified the best options for each student. It would require many hours with each person to model his or her true preference in fine detail. However, the MAU method used in this experiment comes closest to such a full-blown value analysis.

Hammond K. R. Hamm R. M. Grassia J. Pearson T. , “Direct Comparison of Efficacy of Intuitive and Analytical Cognition in Expert Judgment.” IEEE Transactions on Systems, Man, and Cybernetics, 5 (September/October 1987). SMC-17.

Passell P. , “Wine Equation Puts Some Noses Out of Joint.” New York Times, March 4, 1990, p. 1; Ashenfelter O. Ashmore D. Lalonde Robert “Wine Vintage Quality and the Weather: Bordeaux,” Working Paper, Department of Economics, Princeton University, February 1993.

Kleindorfer P. Kunreuther H. Schoemaker P. , Decision Sciences: An Integrative Perspective (New York. NY: Cambridge Press, 1993).