Intuition versus rational analysis

Intuition versus rational analysis

The main alternative to the intuition-based approach is rational thinking.

The rational decision making process relies mostly on logic and quantitative analysis.

You consciously analyze all the options. You formulate the main criteria for judging the expected outcomes of your options and you assign certain weights to those criteria to reflect their relative importance.

Then, based on the expected outcomes and their weights, you rate your options by their perceived utility.

Finally, you choose the option that has the highest rating. If, for some options, the expected outcomes involve uncertainty, you will also need to incorporate in your ratings the perceived probabilities of different possibilities, or even simulation.

Rational analysis still plays crucial role in many situations, especially when you have clear criteria and have to deal with extensive quantitative data, like quantitative finance.

Yet, you will likely face even more business situations where the rational decision making becomes impractical.

With grace and peace,
Vicky

ipv-linkedin

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s