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DEC 1, 2011 11:51am ET

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Bayesian Data-Driven Decision Making

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In his book “Data Driven: Profiting from Your Most Important Business Asset,” Thomas Redman recounts the story of economist John Maynard Keynes, who, when asked what he does when new data is presented that does not support his earlier decision, responded: “I change my opinion. What do you do?”

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Comments (2)
"This is the way good decision makers behave," Redman explained. "They know that a newly made decision is but the first step in its execution. They regularly and systematically evaluate how well a decision is proving itself in practice by acquiring new data. They are not afraid to modify their decisions, even admitting they are wrong and reversing course if the facts demand it."

Some of us must be living in a less utopian universe where opinions are formed first and statistical evidence is compiled to support those opinions. There are few examples of companies or individuals admitting they were wrong and modifying their decisions. Most obfuscate and rationalize their decisions or add yet more biased equations to the already flawed results.

Unfortunately the universe described above is idealized. We have become a society of "opinion makers" based mostly on unsubstantiated data. Therein is the problem which Bayesian principles do not help. It's a behavioral problem not a statistical problem.

Posted by Richard O | Friday, December 02 2011 at 7:29AM ET
Thanks for your comment, Keep it (Sarcastically) Simple. Although I definitely agree with you that we don't live in a utopian universe or work in idealistic organizations, and I most certainly agree that it's a behavioral problem not a statistical problem, that is simply not the point of this post. How else would you propose that a behavioral problem be addressed without focusing more attention on the basis of our decision making so that we could be more transparent about when we are simply opinion makers as opposed to data-driven decision makers? Although I welcome and appreciate all commentary and discussion, at least I have the decency to express my opinions under my real name and not some under some idealistic pseudonym. Best Regards, Jim Harris.
Posted by Jim H | Friday, December 02 2011 at 11:59AM ET
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