Can we make good decisions under ignorance?

by Judith Curry

Does decision making require high levels of confidence? Can there be such a thing as making good decisions under deep uncertainty and even ignorance?   What decision making criteria or guidelines make sense under these circumstances? How does overconfidence hamper the decision making process?

Smithson’s blog Ignorance and Uncertainty has an excellent post entitled “Can we make good decisions under ignorance?”  Some excerpts:

Here is a simplified list of criteria for “good” (i.e., rational) decisions under risk:

1. Your decision should be based on your current assets.
2. Your decision should be based on the possible consequences of all possible outcomes.
3. You must be able to rank all of the consequences in order of preference and assign a probability to each possible outcome.
4. Your choice should maximize your expected utility, or roughly speaking, the likelihood of those outcomes that yield highly preferred consequences.

In non-trivial decisions, this prescription requires a vast amount of knowledge, computation, and time. In many situations at least one of these requirements isn’t met, and often none of them are.

With regards to the climate change issue, I have argued that we do not have sufficient information for #2 and #3.  Steve Schneider argued that we should provide the decision makers with pdfs anyways, since they will create their own as part of the decision making process.

I have argued that the pdfs are highly uncertainty and misleading for decision makers.  Does the lack of probabilities for particular outcomes mean that the situation is too uncertain to make any decision at all?   Not at all.  The climate change problem is well categorized by “decision making under deep uncertainty.”

Roger Kasperson contributed a chapter on “coping with deep uncertainty” to Gabriele Bammer’s and my 2008 book. By “deep uncertainty” he means “situations in which, typically, the phenomena… are characterized by high levels of ignorance and are still only poorly understood scientifically, and where modelling and subjective judgments must substitute extensively for estimates based upon experience with actual events and outcomes, or ethical rules must be formulated to substitute for risk-based decisions.” His list of options open to decision makers confronted with deep uncertainty includes the following:

1. Delay to gather more information and conduct more studies in the hope of reducing uncertainty across a spectrum of risk;
2. Interrelate risk and uncertainty to target critical uncertainties for priority further analysis, and compare technology and development options to determine whether clearly preferable options exist for proceeding;
3. Enlarge the knowledge base for decisions through lateral thinking and broader perspective;
4. Invoke the precautionary principle;
5. Use an adaptive management approach; and
6. Build a resilient society.

He doesn’t recommend these unconditionally, but instead writes thoughtfully about their respective strengths and weaknesses. Kasperson also observes that “The greater the uncertainty, the greater the need for social trust… The combination of deep uncertainty and high social distrust is often a recipe for conflict and stalemate.” 

Again, we see the fruits of Climategate (conflict and stalemate), which generated high social distrust for climate science and the IPCC.

[P]olitical economist Charles Lindblom emerged as an early proponent of various kinds of “incrementalism,” which he engagingly called “muddling through.”  [He] ventured beyond the bounded rationality camp in four important respects. First, he brought into focus the prospect that we may not have knowable preferences. Second, he realized that means and ends may not be separable and may be reshaped in the very process of making a decision. Third, he mooted the criteria of choosing incremental and corrigible changes over large and irreversible ones. Fourth, he observed that many decisions are embedded in institutional or social contexts that may be harnessed to enhance decision making. All four of these advances suggest implications for decision making under ignorance.

“Muddling through” aptly characterizes what is going on in U.S. climate and energy policy, anyways.

Smithson concludes with the following:

At the risk of leaping too far and too fast, I’ll conclude by presenting my list of criteria and recommendations for decisions under ignorance. I’ve incorporated material from the bounded rationality perspective, some of Lindblom’s suggestions, bits from Kasperson, my own earlier writings and from other sources not mentioned in this post. You’ll see that the first two major headings echo the first two in the expected utility framework, but beneath each of them I’ve slipped in some caveats and qualifications.

1. Your decision should be based on your current assets.
   a. If possible, know which assets can be traded and which are non-negotiable.
   b. If some options are decisively better (worse) than others considering the range of risk that may exist, then choose them (get rid of them).
   c. Consider options themselves as assets. Try to retain them or create new ones.
   d. Regard your capacity to make decisions as an asset. Make sure you don’t become paralyzed by uncertainty.
2. Your decision should be based on the possible consequences.
   a. Be aware of the possibility that means and ends may be inseparable and that your choice may reshape both means and ends.
   b. Beware unacceptable ends-justify-means arguments.
   c. Avoid irreversible or incorrigible alternatives if possible.
   d. Seek alternatives that are “robust” regardless of outcome.
   e. Where appropriate, invoke the precautionary principle.
   f. Seek alternatives whose consequences are observable.
   g. Plan to allocate resources for monitoring consequences and (if appropriate) gathering more information.
3. Don’t assume that getting rid of ignorance and uncertainty is always a good idea.
   a. See 1.c. and 2.c. above. Options and corrigibility require uncertainty; freedom of choice is positively badged uncertainty.
   b. Interventions that don’t alter people’s uncertainty orientations will be frustrated with attempts by people to re-establish the level of uncertainty they are comfortable with.
   c. Ignorance and uncertainty underpin particular kinds of social capital. Eliminate ignorance and uncertainty and you also eliminate that social capital, so make sure you aren’t throwing any babies out with the bathwater.
   d. Other people are not always interested in reducing ignorance and uncertainty. They need uncertainty to have freedom to make their own decisions. They may want ignorance to avoid culpability.
4. Where possible, build and utilize relationships based on trust instead of contracts.
   a. Contracts presume and require predictive knowledge, e.g., about who can pay whom how much and when. Trust relationships are more flexible and robust under uncertainty.
   b. Contracts lock the contractors in, incurring opportunity costs that trust relationships may avoid.