A632.1.4.RB - Multistage Decision-Making

Initially posted October 21st. (Accidentally deleted)

The power of multistage decision-making can create fathomable differences over a long term period. This form of multistage decision-making is subject to a difficult type of judgment, the ability to distinguish when to use intuitive heuristics or a dynamic programming model. This dynamic programming model uses mathematically structured formulas to calculate the chances of success for situations that have measurable figures. Unfortunately, not all decisions may use the dynamic programming model as they do not have a total utility that is linear, such as, changing the color of your hair or getting married. Some instances where I would use this decision making process includes one where I am offered to sell my home or take out a new credit account. These situations could surely be guided by the power of a dynamic programming model.


My current decision making process relies on data and research. I often make a decision using plenty of data but I do not discuss it with many people, I am a systematic internal decision maker. After reading chapter three, I’ve come to realize that I also suffer from myopia. The analytical framework I use consists of instances in the past; however, the reflections on future outcomes lack in comparison. The characteristics of my own forecasts during the decision making process is overly conservative and lacks intuitive arithmetics.

Looking into the future is not only a task that may be difficult to the imagination, but adding an accurate value to potential profits is also imperative. In order to avoid under valuing potential profits, my decision making process must first improve on the cognitive limits that I have inadvertently possessed.

Hypothetically, once I have lessened the curse of myopia, there’s still more work to do. Considering both elements in the past and the present, two constant updates must be accomplished continuously: making unbiased insights about the current state of the world and updating beliefs of the world when new data is presented. The world is constantly changing and evolving in every element. If a person does not evolve with the world, they will likely fall in a dark hole of conservatism bias where beliefs do not change regardless of new environments. I would apply optimal dynamic decision analysis to situations where both forward planning and using past information were possible.

Besides avoiding myopia, using heuristics must also coincide with specific decision instances. The consequences of a bad decision must be weighed, heuristics should only be used if the potential problem is forgiving. Along with an issue’s, “forgivability”, a situation’s comparability must be thoroughly analyzed. For example, one situation may be very similar to another one in the past, but it is equally crucial to note the differences among two situations. Lastly, the feedback a decision is receiving should be strictly monitored as it unravels. Considering all of the mentioned elements, the efficacy of a heuristic approach to decision making will be greatly improved.

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