10 The Decision Tool Project

10.1 Assignment 1: Concept Note

In this assignment, you are asked to think about how this framework and these concepts might apply in some real-world application. You are asked to consider some decision problem in which there are real stakes of some kind, and in which a decision-maker could benefit from access to better information. You are asked to describe this decision problem, in outline sketch; and to describe how some information source might help the decision-maker to make better choices.

The goal here is not (yet) to articulate a formal model. Rather, the goal is to begin to give some initial thoughts towards selecting your project topic.

Relation to your own research: If you are working on a research project that involves analyzing data to extract summary information, you are invited to ask yourself: Who will actually use this information? What will they use it for? How much value does could this information provide?

Many people think that if they provide “better” information about some domain area, then better outcomes inevitably will flow forth. But actually, this is not necessarily true. What you are asked to do here is to think rigorously about exactly who will use the information you are providing, how they will use it, and how much value will be realized by empowering them to make better decisions.

If you are working hard to create some information tool, but cannot think of any application in which someone might actually use the information output from this tool make better decisions, you might well pause and ask yourself: Why am I doing this? If no one will ever use the information you are generating, then why are you producing it?

That question is not meant to be sarcastic, or dismissive. It is meant to press you to think hard about how you are using your scarce time and years on this Earth, and to nudge you in directions that create value.

If you are not currently working in a research group to create some predictive or information-productive tool: Think about some work you have done in the past, some predictive tool you are familiar with, or some informative tools used in your area of professional practice. Think about some way this information could be used be a decision-maker to make better decisions.

If you are really stuck and can’t think of anything, come see me, and we’ll try to find a good topic together. But first, really try to think of a topic on your own.

The assignment: In one page, or at most two, articulate a succinct description of a decision problem along the above lines. Make sure your description addresses the following questions:

The decision problem:

Who is the decision-maker?

What decision does this agent confront?

What is the set of options (or potential actions) from which this decision-maker chooses?

What are the stakes of the decision? What real costs and benefits are realized from making better vs. poorer decisions?

The predictive tool:

What information does your chosen predictive tool provide? How will the decision maker use the information generated by this tool to make better decisions?

If you are a bit more ambitious, and still have space, you might address some of these questions:

In what units are payoffs measured?

How, in general terms, are payoffs calculated?

What are the uncertain state variables that influence the value of payoffs?

What is the range of possible values of these variables?

What analytic technique(s) will you use to estimate the values of these uncertain state variables?

What data will you use in this estimation? Are you sure you can gain access to these data?

In what programming language and platform will you perform your coding?