How to Make Better Decisions. Examples from Exploration

Scientific Essay , 2014 , 19 Pages , Grade: A

Psychology - Industrial and organizational psychology

Good decision-making creates value for a company. The decision to drill in the right place (or not) has strong economic repercussions. Moreover, the human approach to decision-making can be flawed. Many of the common flaws in decision-making are related to heuristic factors; that is, by human ways of thinking and drawing conclusions. These factors can negatively impact the outcomes of an exploration program.

This paper gives examples of cases in which geoscientific reasoning can lead to pitfalls, and explores why this is so. The paper then discusses the merits of the multiple working hypotheses (MWH) concept as an aid to harnessing seemingly contradictory data relating to several, often mutually exclusive, interpretations or scenarios. A simple method using a spreadsheet and decision-tree analysis is proposed to quantify the outcomes of multiple scenarios. The method is illustrated by a subsurface example in which two possible interpretations, reef versus volcano, are considered. An outlook of Bayesian statistics and other methods is included.

Inhaltsverzeichnis (Table of Contents)

• 1.0 Introduction
• 2.0 Where Do We Go Wrong? The Human side of Decision-Making
  • 2.1 Traps in Thinking, Logic and Perception
    • 2.1.1. Expectation
    • 2.1.2. Bias due to the Expectation of Uniqueness or Simplicity
    • 2.1.3. Complacency and Belief Bias
    • 2.1.4. Intuition

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This paper investigates the challenges of human decision-making in exploration, particularly highlighting how cognitive biases and flawed reasoning can negatively impact outcomes. It explores the concept of multiple working hypotheses (MWH) as a tool to address conflicting data and interpretations. Additionally, the paper presents a practical spreadsheet-based approach to quantify the outcomes of multiple scenarios, using the example of a subsurface structure. The paper concludes with a brief outlook on Bayesian statistics and other decision-making methods.

• The impact of human cognitive biases on decision-making in exploration
• The importance of addressing contradictory data and interpretations in decision-making
• The application of the multiple working hypotheses (MWH) concept in exploration
• The use of quantitative methods, like decision-tree analysis, to evaluate multiple scenarios
• The role of Bayesian statistics and other advanced methods in decision-making

Zusammenfassung der Kapitel (Chapter Summaries)

• 1.0 Introduction: This section introduces the concept of decision-making in exploration and emphasizes the importance of a scientific approach to decision-making, highlighting the potential pitfalls of "human-style" decision-making.
• 2.0 Where Do We Go Wrong? The Human side of Decision-Making: This chapter delves into the human side of decision-making, exploring the common traps and biases that can lead to flawed judgments. The discussion covers topics like expectation, the expectation of uniqueness or simplicity, complacency and belief bias, and intuition.

Schlüsselwörter (Keywords)

The main focus of this paper is on decision-making, particularly within the context of exploration. Key concepts include biased decisions, heuristics, prospect evaluation, ontology, risk, multiple working hypotheses, decision-tree analysis, score tables, and Bayesian probability.

• Grade: A
• Author: Bernhard Seubert (Author)
• Publication Year: 2014
• Pages: 19
• Catalog Number: V1142472
• ISBN (eBook): 9783346545978
• ISBN (Book): 9783346545985
• Language: English
• Tags: decision-making, biased decisions, heuristics, prospect evaluation, ontology, risk, multiple working hypothesis, decision-tree, score-table, Bayesian probability.