Points And Figures

Do not fear mistakes, you will know failure, continue to reach out.-Ben Franklin

Friend’s PhD Thesis on Decision Making

Here’s a (relatively) brief overview of my research with Professor Reid Hastie: Virtually every decision in business (and plenty outside of business) involves bringing together several experts to work together to solve a shared business challenge. These experts bring to bear on a problem one or both of local domain knowledge (e.g., knowledge of European versus Asian geography, culture, and population centers) and/or distinct functional expertise (e.g., expertise in accounting versus marketing). 

In my research (with Professor Reid Hastie) we adopt a two stage model of collective judgment. Stage 1 (Information Acquisition) involves sharing or pooling of information, evidence, and individual judgments. Stage 2 (Solution Integration) involves the combination of information, evidence, and individual judgments through a social or ‘mechanical’ process. Stage 1 and 2 together produce a single answer which represents the collective judgment of the group. 

Stage 2 has been studied extensively: Lots of research tries to determine what aggregation rules, voting schemes, and/or statistical combination equations are optimal. We focus instead on Stage 1 and explore how enhancing the exchange of information among team members can increase group accuracy. 

The group-decision framework used in this study is the Delphi Method, but our learnings could be applied in prediction markets and face-to-face ad hoc groups. Our specific interest is in determining whether sharing insights or rationales (i.e., unshared, valid, judgment-relevant information) facilitates better information pooling and, if so, in what circumstances.

We find evidence that effective information sharing will matter the most under the following circumstances:

1. On “Intellective Tasks” (e.g., solving problems with objectively correct and verifiable answers);
2. When there exists a broad variety of task-relevant information;
3. Where such task-relevant information is widely distributed across group members;
4. Where group members are motivated; and
5. Where group members posses the ability to “share.”

Why does this matter? Well it has broad implications in terms of how firms, boards, and investors make group decisions. Firms, Boards, VCs all look to facilitate information pooling. A group of individuals is brought together and asked to work towards a common end. It has become a cliché that we need cross-functional teams and that diversity (whether ethnicity, nationality, gender, or merely geographic and/or industry focus) in the workforce because such diversity leads to better business outcomes. The often unstated and arguably naïve assumption on which such ideas is based is that “Two heads are better than one.” While this purported nugget of wisdom has enjoyed sufficient support over the years to become a proverb, in practice it is not always true. Our research speaks to the conditions under which information pooling works and how to maximize its effectiveness.

Anyway, that’s probably more information than any of you wanted, but Mike asked. Reid Hastie and I are looking to publish our research before embarking on the next phase of research where we look to apply our ideas to incentivizing participants in prediction markets to better share information.

Gothic Glory at the University of Chicago

U.S. grain farmers resort to giant storage bags to avoid cheap sales

allows them to gain leverage over giants like Cargill.  Innovation in the farm will help make our food supply more efficient.

Is it 1880 or 1914?

continuations:

I haven’t been posting much the last couple of weeks. There are a variety of reasons for that including spending extra time reading and learning new things but the main reason is that I am trying to understand better where we are today.

What do I mean by that? I have been making the argument that…

Interesting thoughts.  Bureaucrats and politicians can’t help themselves.  They fear the power of the network, and only see risk in it.  They are married to hierarchy.  Mr. Wegner writes “Yet again the political leadership throughout the world is still largely thinking in industrial terms, including emphasizing the nation state as the geographic organizing principle (and playing up ethnic and religious differences).”

 

“Learning what’s important and stripping out the extraneous is how you achieve an economy of motion to hone your thinking to a point of effectiveness and expressiveness. That means getting closer to a place where you have nothing going on.”

—   

Some real truth here.
This Company Made Millions Because There Was Nothing Going On (via awaldstein)

So true.

“In June 2013, the U.S. Food Waste Challenge was launched, calling on U.S. producer groups, processors, manufacturers, retailers, local municipalities, and government agencies to reduce food loss and waste; to recover wholesome food for human consumption; and to recycle discards to other uses including animal feed, composting, and energy generation. The goal of the Challenge is to lead a fundamental shift in how Americans think about and manage food and food waste.”

—   

http://www.porknetwork.com/blogs/Alumbaugh-Everyone-is-Responsible-268133782.html?aid=190911091&author=JoAnn+Alumbaugh#sthash.n5fMHKdO.dpuf

I am glad there is an effort to curb food waste.  I’d love to see us do the same with packaging. 

“The outcome is a blow to the U.S. Chamber of Commerce, which made a sizable investment on behalf of Kingston. The nation’s largest business organization had been on a hot streak. It supported Sen. Thad Cochran (R-Miss.) and Rep. Mike Simpson (R-Idaho), who each defeated challengers backed by national tea party groups earlier this year.”

—   

http://www.washingtonpost.com/blogs/post-politics/wp/2014/07/22/perdue-wins-republican-senate-runoff-in-georgia

There is a battle in the Republican party and it’s playing out in the primaries.  

“More than 30 financial institutions in six countries have been defrauded by sophisticated criminal software that convinces bank customers to install rogue smartphone programs, a major security company reported on Tuesday”

Two fer today. This one popped up in my stream and I like it.