Decision: Two from Luke Wroblewski.

16 March 2006

Luke W. offers these two posts related to decision-making from his SxSW Interactive notes:

SxSW: How to do Precisely the Right Thing

In a nutshell, Dan presented a deviously simple formula for decision-making: expected happiness = odds of gain X value of gain. In other words, how good a decision is depends on the risk (odds) and the size of the pay-off (value). The problem is people are quite bad at estimating both odds and value and the reasons for this are tied to how we make sense of (perceive) the world around us.

SxSW: The Wisdom of Crowds

The reason collective intelligence can arrive at a good decision is that every individual in the group has some piece of information about the solution as well as some misconceptions or incorrect assumptions. When put together, each individuals errors fall off and their unique perspectives combine to create the right answer. There are, however, circumstances that need to exist for the wisdom of crowds to work effectively. […]

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