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Black Swans, New Nostradamuses, Voodoo decision theories, and the science of decision making in the face of severe uncertainty
Author(s) -
Sniedovich Moshe
Publication year - 2010
Publication title -
international transactions in operational research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.032
H-Index - 52
eISSN - 1475-3995
pISSN - 0969-6016
DOI - 10.1111/j.1475-3995.2010.00790.x
Subject(s) - black swan theory , face (sociological concept) , odds , subject (documents) , global warming , economics , risk analysis (engineering) , management science , actuarial science , climate change , computer science , sociology , business , epistemology , social science , philosophy , logistic regression , ecology , machine learning , library science , biology
The recent global financial crisis, natural disasters, and ongoing debate on global warming and climate change are a stark reminder of the huge challenges that severe uncertainty presents in decision and policy making. My objective in this paper is to look at some of the issues that need to be taken into account in the modeling and analysis of decision problems that are subject to severe uncertainty, paying special attention to some of the misconceptions that are being promulgated in this area. I also examine two diametrically opposed approaches to uncertainty. One, that emphasizes that the difficulties encountered in the modeling, analysis, and solution of decision problems in the face of severe uncertainty are in fact insurmountable, and another that claims to provide, against all odds, a reliable strategy for a successful handling of situations subject to severe uncertainty.