Uncovering unknown unknowns: towards a Baconian approach to management decision-making
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Publication Date
2014-07Journal Title
Organizational Behavior and Human Decision Processes
ISSN
1095-9920
Volume
124
Issue
2
Pages
268-283
Type
Article
This Version
AM
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Feduzi, A., & Runde, J. (2014). Uncovering unknown unknowns: towards a Baconian approach to management decision-making. Organizational Behavior and Human Decision Processes, 124 (2), 268-283. https://doi.org/10.1016/j.obhdp.2014.04.001
Abstract
Bayesian decision theory and inference have left a deep and indelible mark on the literature on management decision-making. There is however an important issue that the machinery of classical Bayesianism is ill equipped to deal with, that of “unknown unknowns” or, in the cases in which they are actualised, what are sometimes called “Black Swans”. This issue is closely related to the problems of constructing an appropriate state space under conditions of deficient foresight about what the future might hold, and our aim is to develop a theory and some of the practicalities of state space elaboration that addresses these problems. Building on ideas originally put forward by Bacon (1620), we show how our approach can be used to build and explore the state space, how it may reduce the extent to which organisations are blindsided by Black Swans, and how it ameliorates various well-known cognitive biases.
Identifiers
External DOI: https://doi.org/10.1016/j.obhdp.2014.04.001
This record's URL: https://www.repository.cam.ac.uk/handle/1810/277195
Rights
Attribution-NonCommercial-NoDerivatives 4.0 International
Licence URL: http://creativecommons.org/licenses/by-nc-nd/4.0/
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