Meaningful and Reliable Information

Information is “what we know” and the third dimension of decision quality. For decision making we need information about the future, so don’t confuse information with “data”. There is no data about the future. Too little, or poor quality, information is clearly not ideal for decision making. But it can be just as bad to have too much information.

Information gathering should focus on what is important. There are precious few facts about most decision situations, only assumptions. We must therefore include uncertainty in our information gathering, both in what we know and at the limits of our knowledge. We must also eliminate bias in our forecasting, which is hard to do, because we are all biased.

The great temptation is to think that more information will always help the decision analysis. This is not true! At some point it can be shown that more information will not change the decision. It therefore has no value. Another market research study adds nothing but has definite costs, both in money and time wasted. Don’t do it!

Instead use sensitivity analysis to focus research efforts where they will add value. In situations such as pharmaceuticals, where the development decisions are about which information to gather (eg, in clinical trials), seek to maximise the value of information gathered per unit spent.

Tools:

• 10–90 range assessment of probability distributions
• Interviewing techniques for eliminating bias
• Sensitivity analysis (tornado diagram)

Failure Modes:

• Neglecting to obtain important information
• Ignoring uncertainty (single-point estimates)
• Missing interdependencies
• Focussing on what we know, not what is important
• Ignoring “intangibles”
• Not asking enough “what if” questions, and thus being caught by surprise by an unknown unknown or black swan
• Spending more than the value of information, particularly when new information will not change the decision (ie, the value is zero)

100% decision quality is when we are knowledgeable and ready. Our information is correct and explicit, particularly about uncertainty. Important gaps are filled and we know the limits of our knowledge.

This article is one of a series looking at the six dimensions of decision quality.

• Useful frame—are we answering the right question?
• Creative yet feasible alternatives—having a small set of wide-ranging choices
• Meaningful and reliable information, particularly about risk
• Clear preferences and trade-offs
• Sound reasoning, and clear communication about complex issues
• Commitment to action.