Re:When Worse Is Better (2011)
by brudgers on Sunday August 04, 2019 @12:29PM
(#20607478)
Binary choice describes a range not a distribution. Suppose Bob is optimistic and always decides "yes". The opposite of Bob's decision is always "no".
The right course of action requires looking at the data, not theory. In a context where the probability that "yes" is right is 0.05 -- 19/20 proposals being bad ideas is not an implausible reality -- there's no excuse for keeping Bob, just answer 'no'. There's no reason to assume that correct yes's and no;s are equally distributed.
There's also no reason to assume that an incorrect yes has the same cost as an incorrect no or that a correct yes has the same benefit as a correct no. Silicon Valley venture financing comes to mind.
To me, it's probably a good idea to base business decisions on business facts rather than the beauty of a theory. It's not that theories shouldn't inform decisions, but data is probably a better place to start.
The right course of action requires looking at the data, not theory. In a context where the probability that "yes" is right is 0.05 -- 19/20 proposals being bad ideas is not an implausible reality -- there's no excuse for keeping Bob, just answer 'no'. There's no reason to assume that correct yes's and no;s are equally distributed.
There's also no reason to assume that an incorrect yes has the same cost as an incorrect no or that a correct yes has the same benefit as a correct no. Silicon Valley venture financing comes to mind.
To me, it's probably a good idea to base business decisions on business facts rather than the beauty of a theory. It's not that theories shouldn't inform decisions, but data is probably a better place to start.