Wharton on Making Decisions

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Summary: Tools and perspectives that can improve decision making
Review: 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.

Rating:
Summary: Great Book!
Review: Informative---covers just about every area of decision sciences.
Very readable with solid examples and great insight into the theory as well as the the subtleties and nuances of making better decisions. Academically oriented, but with strong practical applications.

Rating:
Summary: Highly Recommended!
Review: Stephen J. Hoch and Howard C. Kunreuther present a series of articles about making decisions written by professors at the Wharton School of Business at the University of Pennsylvania. The articles describe how decisions are made using an ideal scenario, and then offer practical suggestions on how to make better business decisions. The book is designed to help top executives and managers use the latest methods of analysis and reasoning in decision making. Some may find this approach overly academic - in that many of the research findings are based on social laboratory experiments, statistical analysis and modeling - but if you've been making decisions based on guts, glory and a coin toss, the latest scholarship does offer some stronger strategies. We [...] found several in this solid book that will be of great help to managers dealing with employees, executives formulating strategy and finance or compliance officers weighing corporate risks.