Decision Making: Scientific vs Intuition

What questions should a business ask when making a decision?

• What price to charge?

• Who and how many- to employ?

• How to respond to a new competitor?

• How much inventory to hold?

• Whether to expand the business?

What is an intuition decision making?

Based on intuition, gut feeling and experience

What is scientific decision making?

• Scientific decision-making involves making decisions based on evidence and adopting a systematic approach, rather than intuition, hunch or ‘gut reaction’

• Based on data and analysis

What examples of scientific decision making are there?

• Decision trees

• Investment appraisal

• Dynamic pricing

What benefits are there of scientific decision making?

• Data driven= evidence-based

• Removes some (but not all) subjective judgment from decisions

What drawbacks are there of scientific decision making?

• May still rely on assumptions (judgement)

• Doesn’t guarantee the correct decision

• May ignore the crucial aspect of business experience