Thursday, September 14, 2006

Making better Community Decisions in the face of risks

Now, let's get anachronistic, transporting ourselves in our imaginations to the ship in Fair Havens that October of 59 AD.

Could a different apptroach to the decision have made a difference?

For instance, what if the Centurion had asked the Kubernete ["Pilot" in the NIV] to tell him what the odds were on what kind of weather during October?

Then, the decision makers would have had a better picture of the situation. Going back to my Nov 15, 2002 post:
In many decision-making situations, what the facts are is an open question, often hotly contested by highly articulate advocates and spin-doctors. Thus, we are forced to act in the face of uncertainties, risk and probabilities.

Operations Research offers a framework for making such decisions, based on Game Theory: playing a “game” with Nature as the opponent.

For instance, let us again consider the situation of Acts 27, from a decision-making perspective:

NATURE: The relevant environmental factor was the weather. We can identify at least three plausible states of Nature, given that it was late in the year, so the first winter-storms could have come at any time.

(1) Continued adverse winds until the first winter storm closed down sailing for the winter. (This would have locked the ship up in Fair Havens, regardless of intent.)

(2) A day or two of good sailing wind, as that would suffice to get the ship within striking-distance of the more commodious harbour, Phoenix.

(3) Initially favourable winds, but as a precursor to the first winter storm – what happened in the event.

DECISION-MAKER: This would have mainly been the Centurion, as influenced by the Experts (Ship Owner and Kubernete/steersman), the majority and Paul. Here, there were two options:

(A) Sail for Phoenix, if the winds became favourable. (The majority opinion.)

(B) Stay put in Fair Havens. (Paul’s alternative.)

We know that in the event, we had the match A-3, leading to disaster. However, this is after the fact. How can one decide wisely before the event?

Basically, we can set up a so-called “payoff table” showing what outcomes would be likely from A or B if Nature went to states 1, 2, or 3:

A: In state 1, there would be no opportunity to sail before the winter weather set in. If 2 ocurred, then the ship would have been in a better, and probably safer, harbour. Of course, as happened, we ended with A-3, a disaster.

B: Safe, but not comfortable, and the ship could possibly have been subject to damage.

The next step in deciding is to assess the likelihood or prudence of the outcomes, and to decide on the best alternative. Here, if one knows the probabilities attaching to states 1, 2 or 3 it would be helpful in quantifying the options. (One way to do this, is to ask the experts to indicate how often out of say six seasons the weather would play out as 1, 2 or 3.) But, the usual case is that such “subjective probabilities” are at best educated guesses, and the down-side vulnerabilities may exceed the upside benefits.

In that case, we should assess the range of opportunities and threats, and if possible, estimate what is more or less likely to happen. Then, we could weight the potential benefits and potential costs, to give an expectation, by summing up benefit/cost x probability. (For instance, if we bet $100 on a six on a die, for $1,000, we can expect, on average, to gain $1,000 if we get a 6, with a 1/6 chance, but stand to lose five chances out of six, so we expect to gain: 1/6 x $1000 + 5/6 x (-$100) = $ 83 per throw. One may lose most of the time, but on average, one would gain. That is how businessmen and investors make a living. Profit is often based on returns to the risk of enterprise.)

However, in some cases, like Russian roulette, even though the chance of a negative downside is 1/6: one bullet and five empty chambers when one pulls the trigger; the loss is so high that we would probably decide to minimize our exposure to a catastrophic outcome. (In yet other cases, the outcome is a mixed bag, so it may be wise to see how to minimize regret: the “if I had only known . . .” on either the upside or the downside.)

In the case in Acts 27, Paul’s initial advice was probably prudent, even if the gentle South Wind had lasted long enough, as the potential loss was so serious – as the Apostle pointed out.
But, the point is that if a proper exploration of the possible scenarios and the decision alternatives had been looked at, together, the whole pattern of how the decision was made would likely have shifted. [One challenge: the shipowner probably knew the risks being run, but to him the odds of losing the ship across a whole winter in Fair Havens loomed larger than the possibility of passengers losing their lives in a short run down the coast with a favourable wind -- i.e. his interests and that of the passengers diverged. So, he may well have been tempted to try the usual side arguments and personal attacks that so often distract attention from inconvenient points. ]

Thus, also, the principles of participation, mutual respect and freedom of information are very important if democratic decision-making is to work. It is no surprise to see that these are exactly the principles that are so often wanting in our own public debates -- nor, to see how often disaster results.

So, as we look at many risky decisions in our region today, and as we look at how we make decisions in which the public has a stake, the presence of distractors and disrespectful personal attacks should serve as a warning that somethig is probably wrong here. (Resemblance to developments here in Montserrat, or across the Caribbean and event he world as a whole over the past several decades are NOT coincidental.)

Right -- not might, nor money, nor technical expertise, nor even the views of the majority -- makes right.

No comments: