Smart Choices. Howard Raiffa

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Smart Choices - Howard  Raiffa


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its supporting means objectives to evaluate decision alternatives, you will give too much weight to that particular fundamental objective in your final choice.

      Step 4: Clarify what you mean by each objective. You should at this point have a solid list of fundamental objectives. Now, for each fundamental objective, ask ‘‘What do I really mean by this?’’ Asking ‘‘What?’’ enables you to clearly see the components of your objectives. Clarification will lead to better understanding, which in turn will help you to state the objective more precisely and see more clearly how to reach it. In addition, when it comes time to choose, you’ll be better prepared to appraise whether or not the objective is being met.

      For many objectives, the bottom-line meaning will be obvious. ‘‘Minimize cost,’’ for example, means just that: spend the least possible number of dollars. The meaning of other objectives can be more elusive. You want to ‘‘Minimize damaging health effects’’ from a certain air pollutant. But exactly which health effects? And to whom? You might want to ‘‘Maximize prestige’’ in your professional field. But what do you mean by prestige? In whose eyes? Clarifying the meaning of an objective will help you achieve it.

      Step 5: Test your objectives to see if they capture your interests. Having clarified each of your objectives, it’s time to test them. Use your list to evaluate several potential alternatives, asking yourself if you would be comfortable living with the resulting choices. If not, you may have overlooked or misstated some objectives. Reexamine them. A second useful test is to see if your objectives would help you explain a prospective decision to someone else. If using your objectives as reasons and explanations would be difficult, you probably need to spend more time refining the objectives. What’s unclear? What’s missing?

       Practical Advice for Nailing Down Your Objectives

      You will more readily identify your fundamental objectives if you keep the following considerations in mind.

      Objectives are personal. Different people facing identical situations may have very different objectives. For example, a single person investing for retirement may care only about a mutual fund’s long-term value, whereas a married person might also care about the fund’s interim value, as it would help support her family in case of her early death.

      Different objectives will suit different decision problems. People tend to forget this obvious point. (It’s easier, after all, to recycle objectives than to reformulate them for each decision.) Hospitals should use different objectives when hiring a chief fundraiser, for example, than when hiring a chief financial officer.

      Objectives should not be limited by the availability of or ease of access to data. Many people mistakenly focus on immediate, tangible, measurable qualities when listing objectives, but these may not reflect the essence of the problem. Using easy-to-measure but only partially relevant objectives is like looking for a lost wallet under a streetlight because there’s more light there, even though you know you lost the wallet around the corner in a dark alley. Easily measurable objectives won’t always illuminate what really matters. Watch out for this trap!

      Unless circumstances change markedly, well-thought-out fundamental objectives for similar problems should remain relatively stable over time. The key phrase here is ‘‘well-thought-out.’’ Clearly, with deeper reflection, objectives will change if they were not carefully derived in the first place. But given thoughtful objectives and an absence of major changes in health, finances, and so on, fundamental objectives for similar problems will remain the same or change only slowly.

      If a prospective decision sits uncomfortably in your mind, you may have overlooked an important objective. Such late discoveries may strike you as a sign of sloppy thinking, but that isn’t always the case. Sometimes you must stare a decision in the face before a previously unrecognized objective leaps out. Consider this example. A committee established by a local school board was asked to organize a day-long citizens’ conference on the future of the town’s schools. The committee drafted an agenda using a list of objectives set by the board. To the committee’s dismay, however, the board rejected it. Even though the agenda met all of the board’s specified objectives, further discussion revealed a previously unrecognized objective: avoid highly controversial topics. The board saw this objective only when it was confronted with a decision about the meeting agenda.

      APPLICATION

       To Renovate or Move?

      Drew and Darlene Mather now have two possibilities for getting adequate space for their growing family: to renovate or move.

      ‘‘OK,’’ Drew says, ‘‘if we’re really serious about this, let’s draw up lists of why we should move and why we shouldn’t. What do we really want?’’

      Darlene takes out a pad and pencil, and after about an hour of lively discussion, she has filled up a couple of pages with their ideas. During this conversation, their son, John, appears and, seeing what they’re doing, contributes a few ideas of his own.

       What We Want in a House

ObjectivesSubobjectives
1. Good locationCommute time for DrewCommute time for DarleneDistance to school for JohnDistance to shops
2. Quality of school
3. Quality of neighborhoodCrimeTrafficPlaygroundsAthletic facilities (swimming pool, tennis courts, bike path)
4. Quality of houseSize (number of bedrooms, bathrooms)KitchenFamily roomRequired maintenanceGeneral aesthetics
5. YardSizeLandscaping (trees, lawn, garden)
6. Cost

      The next day, Darlene organizes her notes into a list: ‘‘What We Want in a House.’’ Through further discussion, the Mathers refine their list of concerns (they called them objectives), arriving at the set shown above. Satisfied with the result, Darlene and Drew decide they are ready to begin looking to see whether there are houses on the market that would better fulfill their objectives than their current residence would, once renovated.

       (To be continued in Chapter 4.)

       Lessons from the Application

      The Mathers did a lot of things right in thinking through their concerns and translating them into a list of objectives. They took the time to write them down, and they pushed themselves to define their main objectives in terms of their subobjectives. Their process might have been improved, however, if they had followed these guidelines in working up their list:

      • For joint or group decisions, first have each individual draw up a list separately, then combine them.

      • Phrase each concern as a true objective, using a verb and an object.

      • Ask ‘‘Why?’’ for each objective. The Mathers are presumably concerned about crime and traffic because they are concerned about safety. By specifically listing ‘‘Maximize safety’’ as a fundamental objective, other safety issues—steep stairs, retaining walls, and so on—might emerge as important means objectives.

      • Ask ‘‘What do we really mean by this?’’ This question will lead to a better understanding of such concerns as, in the Mathers’ case, cost and school quality. Does ‘‘Cost’’ refer to the sale price, the size of the down payment and other up-front costs, the size of the mortgage, or the monthly cost for mortgage payments, taxes, improvements, maintenance, and insurance? Similarly, ‘‘Quality of school’’ has many components, and to make meaningful assessments and comparisons, the Mathers will need to define exactly what school quality means to them.

      Once the Mathers have more clearly defined their objectives, the following suggestions would help them further refine their list:

      • Visit and evaluate some homes currently on the market before finalizing the objectives. This step would help the Mathers verify and extend their understanding of their initial objectives.

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