A Primer on Decision Making by James March

This book is perhaps the most useful of all the ones I have read [other than the ones on playing positional chess] and should be the starting point for anyone who wishes to understand the parts of a decision making process.

I once got into an interesting discussion with someone on the chessgames forum who insisted that computers do not 'play' chess. I could not at the time explain why I thought that his statement was incorrect. Perhaps he was thinking about how different machines and humans are when they focus on move sequences and evaluate the winning chances of positions. James March would explain that the machines follow a rational procedure to make a choice as described below:

p.2"A rational procedure is one that pursues a logic of consequence. It makes a choice conditional on the answers to four basic questions:

1. The question of alternatives: What actions are possible?
2. The question of expectations: What future consequences might follow from each alternative? How likely is each possible consequence, assuming that alternative is chosen?
3. The question of preferences: How valuable (to the decision maker) are the consequences associated with each of the alternatives?
4. The question of the decision rule: How is a choice to be made among the alternatives in terms of the values of their consequences?"

In a rational process, we are concerned with the future states of the world that are possible and likely, as well as how we would feel once we reached one of the possible states:

p.3"Within rational processes, choice depends on what alternatives are considered and on two guesses about the future: the first guess is a guess about future states of the world, conditional on the choice. The second guess is a guess about how the decision maker will feel about that future world when it is experienced."

Decision making involves dealing with uncertainty, and we have (perhaps) probability, previous experience, advice of others, rules of thumb, sample polling modeling and analysis to help us imagine or predict what lies within that uncertain area. If we cannot resolve the uncertainty, we might instead choose to take a path that avoids the question entirely.

p.5"Decision makers are assumed to choose among the alternatives on the basis of their expected consequences, but those consequences are not known with certainty. Rather, decision makers know the likelihoods of various possible outcomes, conditional on the actions taken."

How we allocate our attention and comprehend our world has a big impact on the decisions we make. Sometimes the complexity is so large or the time is so limited that we need to begin making simplifying assumptions and using them to form the basis of our decision.

p.10"Time and capabilities for attention are limited. Not everything can be attended to at once. Too many signals are received. Too many things are relevant to a decision. Because of those limitations, theories of decision making are often better described as theories of attention or search than as theories of choice. They are concerned with the way in which scarce attention is allocated... Decision makers have limited capacities for comprehension. They have difficulty organizing, summarizing, and using information to form inferences about the causal connections of events and about relevant features of the world. They often have relevant information but fail to see its relevance. They make unwarranted inferences from information available to them to form a coherent interpretation...As decision makers struggle with these limitations, they develop procedures that maintain the basic framework of rational choice but modify it to accommodate the difficulties. Those procedures form the core of theories of limited rationality."

Sometimes we need to simplify our complex world by using numbers which represent complex quantities. I watched a post-game TV show yesterday where the announcers discussed the 'quarterback rating' of a certain American football player. The art of passing, handing off the ball, and general leadership on the field has been reduced to a number. In fact, postgame TV shows are often groaning with statistics as the announcers attempt to explain to the audience why a team won or lost, and what the primary causes were. Our computer chess program must find a way to reduce the complexity of the situation on the board to a single number so we can estimate which positions are more promising than others, and use that information to focus our search.

p.15,16-17"Faced with a world more complicated than they can hope to understand, decision makers develop ways of monitoring and comprehending that complexity. One standard approach is to deal with summary numerical representations of reality, for example income statements and cost-of-living indexes. The numbers are intended to represent phenomena in an organization or its environment: accounting profits, aptitude scores, occupancy rates, costs of production. The phenomena themselves are elusive - real but difficult to characterize and measure... Decision makers and professionals try to find the right answer, often in the face of substantial conceptual and technical difficulties. Numbers presuppose a concept of what should be measured and a way of translating that concept into things that can be measured."

Seeking, investigating, exploring, evoking - these concepts of attention and how our computer program addresses them will determine to a large extent how strong our computer program will be.

p.23"Not all alternatives are known, they must be sought; not all consequences are known, they must be investigated; not all preferences are known, they must be explored and evoked. The allocation of attention affects the information available and thus the decision."

The study of search and attention might improve the performance of a computer chess program, as well as the study of decision making.

p.23"The study of decision making is, in many ways, the study of search and attention."

When we decide how to allocate the attention of our computer chess program, we are making critical decisions that will affect the overall performance.

p.24"Decisions will be affected by the way decision makers attend (or fail to attend) to particular preferences, alternatives, and consequences... Decisions happen the way they do, in large part, because of the way attention is allocated, and 'timing' and 'mobilization' are important issues.
Decision makers appear to simplify the attention problem considerably."

Rational action seems to involve imagining the future and taking steps to make the imagined world real. Perhaps predicting the future is a better term. Prediction begins by determining what is possible, and from that what is likely. The difference is the consideration of constraints in addition to goals and strategic factors which might help us to achieve the goals or to put pressure on the opponent to prevent us from achieving our goals.

p.78"Much modern thinking about decision making presumes that the expectations and willful actions of human beings enact the future in the present. The presumption is reflected in theories of rational action and power, including theories of strategic action... In these perspectives, change stems from imagining the future and imposing it on the present. Visions of the future, or destinies, are confirmed by following courses of action necessary for their fulfillment."

In competitive situations such as games, actors struggle for positions of power which offer the promise of obtaining objectives. Perhaps we should be looking at the potential of each position on the chessboard to achieve a position of power, and the abilities of pieces on the board to make a contribution in the struggle for power.

p.141"The basic idea of decision making in the face of inconsistency is that different people want to have different things or to fulfill different identities, and not everyone can have everything desired. As a result, individuals (and groups) struggle, competing and cooperating with each other, trying to satisfy their individual preferences and identities. Power is the capability to get what you want or fulfill your identity... The standard presumption of decision making is the struggle for power and, through power, for desired outcomes."

In a game such as chess, Botvinnik [Computers, Chess and Long-Range Planning, p.9] suggests that the players exchange intangible positional factors with each move. The strategic plan is to properly evaluate the worth of these difficult to estimate positional factors, and over time to accumulate small positional advantages that lead to a position of power or strength. From this powerful position, an attack on a weak spot in the enemy position can be launched that cannot be countered without undergoing a further weakening of the position.

p.148-149"Exchange models of power address that problem [power weights cannot be independently observed but must usually be estimated from their consequences] by focusing on a small number of factors that provide a trading advantage in a system of voluntary exchange... The fundamental idea in an exchange model is that participants... enter into voluntary exchange relationships regulated by some system of rules. Each participant brings resources into the arena... The process of choice is one of arranging mutually acceptable trades within the rules. Each individual seeks to improve his or her own position by trading with other individuals... Power in an exchange model comes from control over resources desired by others... When decision makers have something others want, they can exchange it for something that they want... the possession of desired resources gives power. In order to be powerful, decision makers seek control over resources."

If we desire our computer chess program to behave in a rational manner, James March suggests that it make two specific guesses, or estimates, about the 'world', which in this case is the chess game currently underway. Our program must attempt to estimate the future consequences of the possible moves, and it must attempt to estimate the future preferences which will then come into existence several moves into the future as we proceed down the predicted lines of play.

p.180"Rational action stems from two guesses about the world. One is a guess about the uncertain future consequences of possible current action. The other is a guess about the uncertain future preferences by which the outcomes of a current action will be evaluated in the future."

The proposed heuristic attempts to interpret the current situation on the chessboard by making predictions about future consequences. We use this information to form a rough but realistic estimate of the winning chances that is useful and efficient in steering our search efforts. This attempt is part of a rational procedure to make a decision on which move is the best move to play.

p.207"This book is built around two alternative visions of decision making: The first is a vision of rationality in which actions stem from expectations of their consequences and preferences for those consequences. The second is a vision of rule following in which actions stem from a matching of the demands of identities with a definition of the situation. Each vision assumes that decision makers interpret their situations and their experiences, that they make sense of them in order to make decisions. Rational actors - whether acting alone or in negotiation with other rational actors - interpret their situations and experiences to predict future consequences of current actions and their future feelings about such consequences. Rule-following actors - whether acting alone or in concert with other rule-following actors - interpret their situations and experiences to identify appropriate identities and rules. They interpret history to develop the rules they follow."

We gather information, through the process of search and attention, in order to resolve uncertainty and to evaluate decision candidates.

p.207"Uncertainties are reduced through the accumulation and retrieval of information. Information systems are designed, and information is used to facilitate judgments about consequences or appropriateness. Meaning is established in order to make decisions.
From such a perspective, decisions are important because they allocate resources and produce measurable consequences for the decision maker. Information is meaningful if it resolves uncertainties about preferences, consequences, situations, and identities."

Decision intelligence is defined by either a process or a measurement of results. Perhaps it is really bouncing back and forth between these two - we use results to drive process and process to create results.

p.222"Decision engineering is dedicated to producing decisions that are intelligent, but the definition of intelligence is often left unclear. Students of decision making oscillate between process and outcome definitions of intelligence and have never been able to resolve satisfactorily some difficult issues associated with key tradeoffs underlying the definition of good outcomes."

Should we take the short-term or long-term view when evaluating the worth of outcomes?

p.227"Decision outcomes unfold over time. The short run is nested in the long run. Many actions that contribute to short-run well-being are deleterious in the long run, and vice versa. Moreover, preferences and identities change over time, partly as a result of taking actions. Are outcomes to be evaluated in terms of preferences and identities that existed at the time of the decision or in terms of those that exist at the time at which the effects of the decision are realized?
The complications of weighting consequences that are distributed across time constitute a prime topic in both the psychology and the economics of choice."

We should look at the distant consequences of a decision if we truly desire that our decision exhibit intelligence.

p.232"Making an assessment of decision intelligence involves a judgment with respect to distant consequences of actions taken here and now."

Making a decision should involve the search and exploitation of knowledge - especially knowledge which allows us to anticipate the consequences of our decision.

p.240"Decision processes presume the exploitation of knowledge. For example, rationality involves anticipating the future consequences of present actions, as well as future preferences for those consequences when they occur. The ability to use knowledge to anticipate consequences and establish preferences for them is essential."

The proposed heuristic uses adaptive decision making, which James March defines below:

p.252"Adaptive decision making is predicated upon skill at understanding the environment and responding to it. Many adaptive strategies involve monitoring the environment, understanding its causal structure, storing inferences drawn from that understanding, and retrieving the implications of those inferences at the appropriate times and places."

Title: A Primer On Decision Making

1
A Primer On Decision Making

By James March
Reviewed by Kathy Yu

2
Introduction

Book is based on his lecture notes from a course
he taught at Stanford
Gives an overview of ideas for how decisions
happen rather than how they should happen
Ideas of decision making from all disciplines of
social science

3
Consequential/Preference Based or Rule-Following

Decision makers
Pursue a logic of consequence, make choices among
alternatives by evaluating their consequences in
terms of preferences
OR
Pursue a logic of appropriateness, fulfilling
identities and roles by their situation and
following rules that match appropriate behavior
of the situation

4
Rational Theories

Pure rational choice theory
Assume that decision makers have perfect
knowledge about all alternatives and consequences
of those alternatives.
Modifications made to improve the pure version
of rational choice theory.
Limited (Bounded) Rationality
Not all alternatives are known, Not all
consequences are considered, Not all preferences
are evoked at the same time.

5
Satisficing vs. Maximizing

Satisficing
Choose an alternative that is good enough
Maximizing
Choose the best alternative

6
Coalitions

Coalitions are important to policy formation
Join coalitions for various reasons
- join coalitions that hold the same identities
and preferences
- they want to belong to a winning coalition
- join large enough, but not too large to
maximize
individual payoff or to gain control of the
system
2 types of coalitions
1) congruence among all members, all
coalition
members want the same policy
2) a coalition of two indifferent members or
groups
Logroll important in policies where
size makes a
difference

7

Consistency Inconsistency
In Partnerships, Teams Groups

8
Partnerships and Teams

Consistency and Teams
A team is one with individuals involved
having consistent preferences or identities
Very rare to find teams that meet this strict
definition of internal consistency
Interests and identities are inconsistent
-Different people want different things
-Different people want to fulfill different
identities
-Not everyone can have everything desired

9

To Cope with Inconsistencies
- Inconsistencies are removed by aligning
incentives for
both partners through bargaining, side
payments, and
agreements
Exchange Models of Power Participants
exchange their
resources such as money, property, knowledge,
competence, access, authorities,
and information
- Formation of partnership
a potential partner may conceal unattractive
properties,
or intentionally hide information at time of
agreement
- Decentralization/Organizational subunits-
departments
build barriers to friendship, loyalty to
other
departments, define their group in opposition
to
other groups, other departments (highlight
inconsistencies AMONG groups, while
inconsistencies WITHIN groups are ignored)

10
Theories of Attention

Attention is a scarce resource
- information overload
Rational decision makers invest their time to
information/problems only to the point where
marginal costs equal marginal expected return.
-Decision makers look for ways to reduce
time/costs of attention, they buy time.
-such as hiring a manager, or delegate
someone to represent them.

11
Decision Makers Face Limitations

Limitations to Attention, Comprehension, Memory
Strategies to cope with these limitations
-Abstract central parts of a problem
-Look for consistent information, ignore
inconsistent ones
-Attend to problems that are close in
proximity rather than problems that are
distant

12
Garbage Can Process

Decision process involves a collection of
individuals/groups who are simultaneously
involved in other things.
Time brings order to complex interactions among
actors, solutions, problems and choice
opportunities.
Activities can be ordered in time and connected
by their temporal relations events that occur
at the same time are associated with each other.
Decision processes build on these temporal
categories by combining people, problems,
solutions in terms of their simultaneity.
Any particular decision is a combination of
different moments of different lives.

13
Loose Coupling

Talk and action are loosely coupled, the talk of
decision making is not always closely connected
to the action of decisions.
Decisions and Implementations
-logrolls, makes implementation difficult
because members of the coalition are
likely to be elsewhere or uninterested in
the implementation of the decision.
-symbolic commitments, the act of supporting a
policy has more symbolic meaning than its
adoption, and its adoption can be more
important than its implementation.

14
Intelligent Decision

Decision Engineering
a process dedicated to producing decisions
that are intelligent
Action is intelligent if all the results has
satisfied the wishes of all relevant parties
Intelligence of an action/decision is based on
its outcomes
Whether a decision is intelligent or not is
highly subjective
Decision outcomes unfold over time, decisions
that may seem good in a short run may have
deleterious effects in a long run
Bias towards effects that are clear and close -
leads to decision making procedures to be
inattentive to important concerns that are fuzzy
and distant

15
Symbolic Significance of Decision Making

Decision making tells us more than just the
decision rendered
It tells us
- who is the decision maker, how he
thinks, talks, acts
- who is smart, who is powerful
- who is virtuous
- what is morally important, what is proper
behavior

16
Conclusion

Decision making is a very complicated process
Hard to be confident that any decision process
will yield an intelligent decision
Pessimistic
the elegance and beauty of human life is
augmented within a vision of decision making, and
the human spirit is elevated. The idea of
decision making gives meaning to purpose, to
self, to complexities of social life.

17

Questions