Smart Choices (Hammond, Keeney, Raiffa, 1999)

A Practical Guide to Making Better Life Decisions

Have you ever hired someone only to regret your decision two months later? Or looked at your financial portfolio and wondered why you bought the stocks you did? In Smart Choices, authors John S. Hammond, Ralph L. Keeney, and Howard Raiffa take the guesswork out of the decision-making process and offer a systematic approach to making the right choice. Most of us have problems making decisions, because we've never learned how. The authors write:
Despite the importance of decision making to our lives, few of us ever receive any training in it. So we are left to learn from experience. But experience is a costly, inefficient teacher that teaches us bad habits along with good ones. Because decision situations vary so markedly, the experience of making one important decision often seems of little use when facing the next.
Smart Choices outlines eight elements involved in making the right decision, from identifying exactly what the decision is and specifying your objectives to considering risk tolerance and looking at how what you decide on today influences what you may decide in the future. The book is full of real-life situations and scenarios that effectively illustrate each element of a good decision. If you think the topic of making the right choice is mundane or a simple matter of common sense, then think again. Smart Choices will relieve you of the regret that so many of us carry because we didn't know how to "think it through." --Harry C. Edwards --This text refers to the Hardcover edition.

From Publishers Weekly
In 1966, the Lovin' Spoonful had a #2 hit with "Did You Ever Have to Make Up Your Mind?" Two years later, Raiffa answered that question for a generation of academics with his book Decision Analysis, whose argument - that decision-making skills can be learned and applied as a discipline of their own - made Raiffa deeply influential in management and social science. Raiffa (a former professor at Harvard Business School), his longtime associate Hammond (a professor of management and engineering at the University of Southern California) and Ralph Keeney (The Art and Science of Negotiation) here explain decision-analysis techniques and stratagems for the benefit of nonspecialists. They provide substantial, straightforward explanations of concepts (risk tolerance, sunk costs, desirability curves) that sound arcane but may help readers to buy the right car, choose a mutual fund, decide on a school, or plan a vacation. Unfortunately, the lingo of self-help often substitutes for the jargon of management consulting, as when Raiffa's famous five decision steps become the trendy acronym PrOACT. And the example problems can seem clich�d, two-dimensional or implausible, even when based on fact. Nevertheless, recommendations like "Remember that the value of an incremental change depends on what you start with" and "Make sure your subordinates reflect your organization's risk tolerance in their decisions" are, at the least, good reminders that the logic of decision making is often counterintuitive; at best, they are an important, useful set of insights.

p.6-9 There Are Eight Keys to Effective Decision Making...

Work on the right decision problem... Specify your objectives... Create imaginative alternatives... Understand the consequences... Grapple with your tradeoffs... Clarify your uncertainties... Think hard about your risk tolerance... Consider linked decisions.

p.29 Why are objectives so important? They form the basis for evaluating the alternatives open to you. They are, in other words, your decision criteria.

p.33-39 Identifying objectives is an art, but it's an art you can practice systematically. Follow these five steps...

Step 1: Write down all the concerns you hope to address through your decision...

Step 2: Convert your concerns into succinct objectives...

Step 3: Separate ends from means to establish your fundamental objectives...

Step 4: Clarify what you mean by an objective...

Step 5: Test your objectives to see if they capture your interests.

p.48-49 Many decision problems have constraints that limit your alternatives. Some constraints are real, others are assumed... Try assuming that a constraint doesn't exist, and then create alternatives that reflect its absence. If the resulting alternatives are attractive enough, maybe you can figure out how to make them feasible.

p.50 Do your own thinking first. Before consulting others about alternatives, give your own mind free reign. Some of your most original ideas, born of innocence, may be suppressed if exposed to others' ideas and judgments before they have been fully formed.

p.54 Odd as it may seem, the best alternative is sometimes a process rather than a clear-cut choice.

p.56-57 Information helps dispel the clouds of uncertainty hovering over some decisions. A doctor, for example, will gather information from a patient's history, examination, and tests to reduce uncertainty about a diagnosis... Better information means better decisions... First list the areas of uncertainty. Then, for each one, list the possible ways to collect the needed information. Each of these ways is an information gathering alternative.

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