on 21 June 2004
Both editors are Professor at the Wharton School, University of Pennsylvania, which is one of the highest-ranked business schools in the world. Stephen J. Hoch is Professor of Marketing, while Howard C. Kunreuther is Professor of Decision Sciences and Public Policy and Management. Robert E. Gunther serves as coordinating writer. The book is split up in 4 parts, with each part consisting 3-to-5 standalone chapters.
Chapter 1 - A Complex Web of Decisions serves as an introduction to the book, explaining that we make a wide range of decisions every day. It starts with a very strong point: "Most of us do not make great decisions, and few of us are aware of this fact." However, through the different chapters in this book the editors hope to improve our awareness of the intricacies of the decision-making process. "We examine how people should make decisions according to the models, how they actually behave, and how they can improve their decision making."
The set-up of the book is that we look at decision making from various levels, from an individual/detailed level to a very broad level. In Part I - Personal Decision Making, consisting of 3 chapters, the authors look at individual decision making. These decisions are often influenced by emotions, intuitions, and a focus on present versus future consequences. "How do these factors influence decision making? How can we use these personal assets and foibles to make better decisions?" Understanding these factors should allow us to improve our personal decision making.
The second part, Managerial Decision Making, consisting of 4 chapters, focuses on the managerial decision-making process. "We may be more concerned in this role with using models to set up decision processes in our organization, balancing speed and reflection, dealing with complexity and reframing questions to break out of traditional mind-sets." This part provides us with a variety of tools and perspectives that can help our decision making with an interesting chapter on the differences in Eastern and Western decision making, but also a very strong one on framing of decisions.
Part III - Multiparty Decision Making moves from a single manager to the next level of complexity - interactions among several managers in negotiations across multiple periods. It discusses critical issues at this level. This part, in particular, shines new light on a number of decision making issues. It provides a link with game theory (the field of strategy making), reputation, negotiations, and the impact of modern communications technologies on negotiations.
The final and broadest perspective is discussed in Part IV - Impact of Decision Making on Society. Decisions on this level involve a mix of personal and collective values and reflect quirks in how we prepare for high-impact, low-risk events. And there are some amazing conclusions in this part, whereby we sometimes follow the crowd in the wrong direction and the different approaches between our public and private decisions.
Although this book is named 'Wharton on Making Decisions', there are various chapters by specialists from other academic institutions. Each chapter is an excellent piece of work and can be read on a stand-alone basis. However, as a collection it enables us to improve our understanding of the decision making process on different levels, which should enable us to make better decisions, which, in turn, should result in outstanding outcomes. The insights are based on the latest research in this field (this book was initially published in 2001). Please note that the book is written in somewhat academical language.
This is one of the volumes which comprise a series published by John Wiley & Sons. It was edited by Stephen J. Hoch and Howard C. Kunreuther with Robert E. Gunther. In the first chapter which serves as an introduction, Hoch and Kunreuther examine what they characterize as a "complex web of decisions." As they observe, "We need to make the decision making process conscious, to be aware that we are cutting corners and when we need more thorough analysis. Building this awareness of the process - especially given the new complexities of decision making in our modern age - is crucial to successful management....The goal of this book is to build this awareness of the intricacies of the decision-making process." Collectively, the 16 contributors explore decision making on four separate but related levels: as an individual, in our role as a manager, in the context of negotiations and other multiparty interactions, and at the broadest level, in terms of how societal decisions can be managed.
Appropriately, the material is organized within Four Parts:
"Personal Decision Making" (Chapters 2-4): Issues addressed include the challenges of personal decisions, the role the emotions play in managerial decisions - for good or ill, how humans make "surprisingly effective decisions" even when using short cuts, and the same approaches can lead to serious errors...and consequences.
"Managerial Decision Making" (Chapters5-8): Issues addressed include how to combine analytical models with intuition and other approaches during the managerial decision-making process, the significant differences between "the expedient Western approach" and the "reflective Eastern strategy" of decision making, and why managers must be able to "manage their own frames, or they will be blinded by their own successes and the limits of their world views."
"Multiparty Decision Making" (Chapters 9-12): Issues addressed include the nature and extent of interactions between and among managers across multiple periods, what Game Theory suggests about how people learn from experience, how reputations affect the way partners and opponents approach negotiations, how these reputations can best be used and shaped, common deceptions in negotiations and how to recognize them, how decision-support systems and resources can help improve negotiation results.
"Impact of Decision Making on Society" (Chapters 13-17): Subjects covered include various uses of medical tests based on analytical models, the impact of personal (Protected") values on societal decisions, what "protected decisions" are and how they are made, the nature of "information cascades" which involve either "learners" or "lemmings," and how and why inconsistencies in private and public decisions suggest a "split personality."
The 16 contributors are to be commended on their collective examination of how people should make decisions, how they actually do so, and how they can improve their decision making. I especially appreciate the generous provision of real-world examples (e.g. Nick Leeson and Barings Securities), as well as reader-friendly check-lists (e.g. lessons for managers based on the Leeson/Barings scandal), charts and graphs which illustrate core concepts, and use of italics and bold face to expedite periodic review of key points.
My guess (only a guess) is that those in greatest need of what this book offers are least likely to invest the time and effort required to absorb and digest the material, much less act upon it. If y