Reference no: EM131450098

Question: Computerized Decision Making

As you saw in the opening vignette, computerized decision making has really taken off in recent years. Some have blamed the financial crisis that began in 2007-2008 on excessive reliance on these computerized decision-making models. Lending officers who used to make individualized decisions about credit worthiness through personal judgment were replaced by computerized and statistical models, which resulted in mechanistic decision making. As a result, large numbers of decisions were tied to a common set of assumptions, and when those assumptions proved to be wrong, the entire credit system fell apart and the economy faltered.

Besides the use of computerized decision models, the use of computerized systems like Twitter for information sharing and the burgeoning number of computer "apps" may be leading to information overload, so facts and figures replace analysis and thought in making human decisions. Eric Kessler from Pace University's Lubin School of Business notes, "What starts driving decisions is the urgent rather than the important." Researchers have begun to find that people using too much information actually make worse decisions than people with less information, or they get so swamped in information that they are unable to reach a decision at all. Computer decision models do present certain advantages. Computers are capable of amassing and compiling enormous amounts of data and using them to spot trends and patterns a human observer would simply never see.

Computers also are not prone to emotional decision making or falling into the heuristics and biases we discussed in this chapter. Finally, computerized decision making systems are generally faster than human beings. However, computer decision-making systems have certain faults that might severely constrain their usefulness. Although computers can grind through masses of data, they are not capable of intuition or creative thought. As scholar Amar Bhidé notes, "An innovator cannot simply rely on historical patterns in placing bets on future opportunities." People are much more likely to spot opportunities that lie just beyond what the data can tell us directly. Also, groups of people working in collaboration can discuss and question assumptions and conclusions. Computers cannot actively consider whether their programming makes sense or adapt automatically when values change.

1. What are the specific advantages of using computerized decision making? How can computers be better decision makers than humans?

2. What are the weaknesses of using computers as decision tools? Are computers likely to have any specific problems in making decisions that people wouldn't have?

3. Do you think computer decision making systems can effectively take ethical issues into account? What is the role of human decision makers in creating ethical choices?

4. Are there advantages to completely disconnecting from the wired world when possible? What can you do to try to retain your ability to focus and process information deeply?