Wednesday, February 24, 2010

The problem with data (or lack thereof) in decision making

IME data over-dependent analyses and decision making face many de facto problems in the real world, esp. in the last few decades. On the other hand, decision sciences are not over-dependent on data.

A key lesson I took away from b-school management accounting is that joint costs cannot be allocated (via ABC etc) because if they are, that can lead to very faulty decisions in business or public policy

Real life decision making is never made with full data or fully reliable data available, that is the difficulty & beauty of decision making. Plus the "full" or perfect information assumption in Finance Theory does not bode well with the daily reality

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BRs
Nick

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