\n<\/p>\n
The sensitivity analysis for a decision is easy to overlook, because we tend to focus on the expected<\/em> outcome.<\/p>\n Perhaps it makes sense to begin with the edges instead.<\/p>\n Upside: If this works, really works, what are the implications?<\/p>\n Downside: If this fails, totally, what are the costs?<\/p>\n After we understand the edges, then it makes sense to be more nuanced about the chances of either happening and start discussing the likely outcome.<\/p>\n Want to try a brand new place for dinner? The worst that can happen is that you’ll waste a dinner. On the other hand, if it’s dinner with your new big account and the boss is coming, the worst that can happen is very different.<\/p>\n Should you buy a lottery ticket? Well, the big outcome is millions of dollars. The small outcome is a total waste. Now that we understand the extremes, perhaps it pays to realize that the odds of winning are essentially zero, so we ought to pass. <\/p>\n Don’t be dissuaded by the small or transfixed by the big. That’s only the first half of the calculation.<\/p>\n Of course, this is obvious. And yet we are rarely patient enough to do all the steps. (Driving to the airport is dramatically more dangerous than getting on a plane…)<\/p>\n \n\n","protected":false},"excerpt":{"rendered":" The sensitivity analysis for a decision is easy to overlook, because we tend to focus on the expected outcome. Perhaps it makes sense to begin with the edges instead. Upside: If this works, really works, what are the implications? Downside: If this fails, totally, what are the costs? After we understand the edges, then it […]<\/p>\n","protected":false},"author":1,"featured_media":7062554,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[224436],"dealstore":[],"offerexpiration":[],"class_list":["post-7062553","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","tag-upsidedownside"],"yoast_head":"\n