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,


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