Incentives: Example of a Common Incentive Mechanism
A bonus scheme proportional to sales performance is a common incentive mechanism used to motivate sales staff. In this text, the mechanism is used to illustrate components of incentive mechanisms.
Incentives: Components of Incentive Mechanisms
An incentive mechanism is used to influence behavior. What are the components of an incentive mechanism, and how is that related to decision governance?
Governance Dynamics: Case-Based Development of Decision Governance
If decision governance in a firm were to develop in a manner analogous to the development of English Common Law, it would develop in response to lessons learned from cases of past decision making.
Governance Dynamics: Change Driven by Cases and Principles
Why does decision governance change in a firm? Change to decision governance is motivated by either the implementation of principles, that is, abstract rules, or because of lessons from past decision making.
Slow & Complex Decision Governance and Its Consequences
A common problem with governance is that rules accumulate over time. They are added and adapted to handle new situations, new behaviors, and, or have a broader and deeper impact. As rules accumulate, and become more interdependent and specialized, complexity of governance increases. What are the consequences?
Motivated Reasoning: How To Detect And Mitigate Its Risks
Motivated reasoning consists of processing information in a way that aligns with one’s desires, beliefs, or goals, rather than neutrally evaluating evidence. How to mitigate it through decision governance?
Impressions Of Others: How They Influence Decisions And How To Regulate Them
Impressions of others influence our confidence in the information they provide and the predictions we form about their behavior, which can shape decisions and their outcomes.
Policy Windows: What They Are And When They Occur
This text is about so-called policy windows, situations in which three streams of activity – the problem, policy, and politics streams – align to create an opportunity for policy change within organizations.
Punctuated Equilibrium: How To Know If A Decision Process Is Ready For Disruption
This text looks at signals to look for when applying a decision process, to determine if that process cannot be incrementally improved, but needs to be significantly changed.
Incrementalism: What It Is, And When/How To Implement It In Decision Governance
Incrementalism prioritizes pragmatic adjustments of the current state over transformational solutions, focusing on feasibility and continuity. What are the conditions in which it is interesting to implement incrementalism through decision governance, and what risks does that create?
How a Decision Process Can Create Evidence of Compliance
When a decision process is adapted to comply with a policy, it will include new components – new actions, roles, responsibilities, among others. At the same time, the process needs to be further adapted to ensure that when it is executed, data is collected that can be used as evidence of compliance later on.
Adapting a Decision Process to Comply with a Policy
Given a specific policy that an organization needs to comply with, how can we adapt the organization’s decision processes to comply with that policy? Or, how does that organization’s decision governance change to help ensure compliance?
How Does Public Policy Influence Decision-Making?
This text outlines how the mechanisms for public policy compliance influence various stages of decision-making. If we understand how this influence can occur, we can build decision governance in ways that ensure compliance with the right amount of resources.
What is the Role of Public Policy in Decision Governance?
Public policies create requirements and constraints on how and what decisions can be made, and as such are a critical input to the design of decision governance frameworks.
Dynamics of Public Policy Development
Public policies shape decisions and consequently incorporate decision governance. It is interesting to understand how public policy develops and changes, as this helps understand how decision governance can develop and change.
Group Decision-Making: Common Models in Organizational Theory
Decision governance is used to change decision-making processes in organizations. This text outlines various models of such processes, which were proposed in research on organizational theory.
Individual Decision-Making: Common Models in Psychology
Models of individual decision-making in psychology identify psychological factors that shape individual decision-making. Decision governance will influence these factors, which makes it necessary to at the very least be aware of them, as a basis of thinking about how they may interplay with guidelines and processes introduced through governance.
Group Decision-Making: Common Models in Economics
This text is an outline of common approaches in economics research for modeling group decision-making, focusing on their main concepts, applications, and the questions they raise for the design of decision governance.
Individual Decision-Making: Common Models in Economics
Decision-making models in economics are simplified descriptions of how decisions are made. Understanding these models is useful for designing decision governance.
Decision Governance Is Interdisciplinary
Designing effective decision governance systems requires drawing on a wide range of academic disciplines, each of which provides valuable insights into different aspects of decision-making.
Simulation of Attention, Memory, Competence, Expectations, Reputation in Decision Making
How do alternative decision governance designs impact attention, memory, competence, expectations, reputation, and how do they in turn affect the steps a decision maker takes to reach a goal?
Level of Detail Can Influence Probability Estimates
What if the level of detail given about an option influences the perceived probability that the events it describes will occur?
What Interests Do Stakeholders Have in Decision Governance?
If we know who the stakeholders are, when designing decision governance, then we need to know their interests, so that we can make sure these are met through the decision process.
Who are the Stakeholders of Decision Governance?
As decision governance influences how decisions are made, everyone who participates in preparing a decision, makes the decision, and lives with the consequences of it, is a stakeholder in the design and change of decision governance.
What Is Decision Governance?
Decision Governance refers to values, principles, practices designed to improve the quality of decisions.
When to Override a Decision
To override a decision, you need to know a decision was made (observability), have rights to override it (authority), and believe that doing so will lead to a better outcome, including preventing undesirable outcomes (superiority).
How to Price Distraction in Decision Making?
If the decision maker is distracted, they should pay the price of reaching their goal after more effort. A simple simulation can be done to show just how much distraction may cost relative to a case when the agent’s attention is directed to the goal.
Increased Social Distance (Over)Simplifies Explanations
Social distance, in the context of decision making, refers to the decision maker’s perception of similarity to others that may somehow matter for the decision at hand.
The Design Space for Decision Governance
What are the parameters of a decision situation that we want to influence through decision governance?
Why Perception of Long Term Outcomes Should Be Influenced First?
If we want to influence preferences away from specific options, we should invest more effort to change high-level construal of their distant outcomes, rather than low-level construal of their immediate outcomes.
Drawing Attention to Known vs Unknown Goals
If we need to design governance that influences attention, then it matters if we know or not the goal of the decision maker. This text provides a simple simulation that illustrates the differences between the time it takes for the decision maker to reach the goal in both cases, all else being equal.
How Can Governance of Attention and Memory Change Choice?
Three decision governance strategies are compared in terms of how they influence the ability of an agent to reach their goal in a simple problem: the first strategy involves no governance, the second complement’s agent’s memory, and the third draws their attention.
Emotions Mediate Decisions Always and Everywhere
Decision governance can be designed to make decision makers aware of their and others’ emotions in a decision situation, and to help everyone move to a more neutral stance, if that can lead to a better outcome. This text outlines common strategies for doing so.
Random Decisions Are Expensive
It seems obvious that it makes no sense to randomly choose between options we are presented with. In this text, I’ll set up and run a simple simulation that illustrates this. The simulation is another way to think about the impact of decision governance, even if in a very simple setting.
Selective Memory Can Be Desirable
Ease at which memory will be accessed, accuracy of memories, association of stimuli with memories they lead to, will all influence the information that a decision maker will use. Decision governance can to some extent influence what is recalled, how that is related to the choice at hand, and where attention is drawn.
Attention Depends on Stimuli & Goals
Decision governance can neutralize or amplify factors driving attention in a decision situation. The choice of strategy depends on the observed or anticipated behavior of the decision maker and the desired outcome.
How to Make GenAI Better Faster? Authorship + Community + Credibility
We should reduce the cost of authorship and create an incentive mechanism that generates and assigns credibility to authors in a community.
Perceptiveness & Experience Shape Rapid Choices
If the time to decide is short, decision governance needs to improve how the decision maker identifies cues, matches them to experience, what they experience they match them to, and the quality of their prediction of action outcomes.
Expected Uncertainty to Unexpected Utility
If a decision process is designed according to the expected utility (maximization) model, then the choice of an option is explained by it having the highest expected utility among considered options. Consequently, decision governance over such a decision process needs to help the decision maker predict and prepare for unexpected events in order to maximize utility.
Max(Utility) from Variety & Taste
If a decision process is designed according to the classical utility maximization model, then the choice of an option is explained by it having the highest utility among considered options. Consequently, decision governance over such a decision process needs to influence (i) which options are considered, (ii) how options are compared against preferences, and (iii) how preferences are formed.
Simple & Intuitive Models of Decision Explanations
An explanation of a decision will provide reasons for why the chosen option was chosen over others. In this text, simple and intuitive models are presented for how to organize information into an explanation of a decision. The models are interesting only as a starting point, before we go into more elaborate ones and in…
Explaining Decisions
Explanations of decisions are central to decision governance: before changing how decisions are made, you need to explain how they are made; you need to explain why they need to be changed; and, you need to explain how changes that governance brings should lead to better decisions. So the question is: What is a good…
Decision Governance Concepts: Outcomes to Explanations
Let’s assume that there is a situation you observed, and you want to understand the decision that led to it – maybe there is something particularly good about the situation and you want to see how to increase the probability that this happens again, or there is something you would want to prevent from happening…
What Is a High Quality Decision?
Is it one that led to the best outcome? Or one that integrates all the relevant and available information? Maybe one that is liked by a majority? If decision governance is followed to the letter, will that guarantee a high quality decision? The quality of a decision depends on the following: The reason a decision…
Are Easy Options the Likely Choice?
How many options will be identified when a decision needs to be made? How much thought will go into developing a robust rationale for each option? Doing both of these takes effort. Unless there are incentives to invest effort, a decision will be made from one or few low quality options. That is a simple…
Business Processes Implement Decision Governance. How?
A business process describes how something is done by highlighting mainly the actions to take, their dependencies (including their sequence), the roles in the firm who do these actions, as well as what triggers the process to start, and how we know when the process ends. Business processes implement decision governance in several ways. It…
What the Organizational Chart Says about Decision Governance
The org chart shows much more than who reports to who. It is one of few core tools for learning about the existing decision governance setup, as well as for planning and implementing changes to how decisions are made. If you look across the org chart vertically, across reporting lines, here is what you can…
Incentives in Decision Governance
Decision rights will be exercised, and decision obligations discharged only if there are incentives to do so. If you need to make a decision and bear the consequences, i.e., exercise decision rights and discharge obligations, the only reason to do so is if you see how it makes sense with regards to what you want….
Can Decision Autonomy of an AI Be Distinguished from Malfunction?
I wrote in another note (here) that AI cannot decide autonomously because it does not have self-made preferences. I argued that its preferences are always a reflection of those that its designers wanted it to exhibit, or that reflect patterns in training data. The irony with this argument is that if an AI is making…
Decision Responsibilities in Decision Governance
Being entitled to make decisions carries with it the responsibility for outcomes of actions that the decisions led to. Accountability can be implemented through decision governance by defining responsibilities for outcomes of decisions. The idea that decision responsibilities are the counterpart to decision rights is easy to understand. However, defining useful decision responsibilities involves finding…