Values and Trade-offs: How to Quantify Anything! 🇬🇧 🇧🇷

A decision is a choice between alternatives (options). The only way a decision-maker (DM) can influence its outcomes is through the quality of the decision itself – the rest is up to chance, nature, decisions of others, …   There are 6 dimensions that define, and are used to assess, the quality of a decision (before it is made). One is “Clear Values and Trade-offs”.

A DM cannot make a rational decision unless they are first clear about what they want it to achieve, usually multiple things, and how to quantify their value - including so-called “unquantifiables” (eg company reputation, strategic advantage, “team-playerness” of a job candidate). They must also make trade-offs between the things they want more of (eg benefits, returns) and those they want less of (eg costs, risks), and specify their preferences for outcomes within each objective. Note: in the decision-making community, risk is a possible negative outcome for the decision-maker, there subjective, not objective - but variability (frequencies of past events) is objective.

Many DMs make the mistake of leaping straight to creating alternatives and collecting information before their objectives have been clearly stated. This is very inefficient as it can lead to: creating and evaluating alternatives that are unlikely to deliver what the DM values, or missing others that could; collecting and evaluating information that has little impact on the value measures, or failing to collect information that does.

Some relevant “tools” from the decision-maker’s “tool box” will also be presented:

• value hierarchy - to break down high-level, fuzzy “wants” into specific quantifiable objectives
• constructed scales - to quantify attainment of any objective – nothing of importance/value needs to be left out of assessing the alternatives
• value functions – to express the DMs relative preference for outcomes within an objective
• swing (decision) weights and trade-off plots (a common error is weighting objectives based on their absolute importance, rather than their ability to identify the best alternative!)