A feeling for good decisions

Feelings and temperature are necessary to make good decisions. However, the temperature must not become too high, claims Fred Wenstøp and Haavard Koppang at BI.

KNOWLEDGE @ BI: Value conflicts in Decision Making

Professor Fred Wenstøp and Associate Professor Haavard Koppang of BI Norwegian School of Management aim to develop an ethical platform for operations research (decision support).

The BI researchers present their work in their article ”On operations research and value conflict” published in the scientific journal Omega.

In practical terms, it is all about showing how value conflicts between stakeholders can be handled in the best possible manner.

The term operations research was coined during the Second World War describing a set of mathematical optimisation methods that were developed to support the allied warfare.

Operations research later developed into a management-oriented scientific problem-solving solution. The aim has been to estimate the impact of decisions by using constructed mathematical, economic and statistic models.

As the words “mathematical” and “scientific” have been such central terms, many people have regarded operations research as value free and thus not subject to ethical issues.

However, the discipline has developed into a tool for analysing and solving conflict issues – such as the conflict between the environment and economy – thus the decisions have consequences for many stakeholders. As a result, ethical concerns become important.

Neuroeconomics and web pages

The BI researchers gained inspiration for their work from three different sources:

The new growing field of neuroeconomics (the study of how decisions are made combined with knowledge of how the brain works, economics and psychology)

The growing practice of presenting values on the organisation’s web pages.

Own experience of applying operational analyses to health and environmental issues.

We are all familiar with the classic conflict between reason and emotion. According to insight gained from neuroeconomics, the idea that it is possible to handle value-laden issues based on common sense alone is a utopian one.

”The brain can be of great help as a guide, but in the end all choices are triggered by emotions,” says professor Fred Wenstøp, affiliated with the Institute for Strategy and Logistics at BI Norwegian School of Management.

Conflict level must be tempered

Wenstøp and Koppang advocate abandoning the old definition of rationality as a cold, emotionless use of the brain and instead accept that rational decisions require emotional balancing of values.

Furthermore, emotions contribute to the temperature of discussions. This depends on the conflict level. The more stakeholders involved and the more fundamental values at stake, the higher the conflict level.

According to the BI researchers, a certain temperature is necessary to make good decisions. If too cold, you risk not taking into account important values. If emotions run too high and the temperature becomes too hot, you risk neglecting future consequences.

The researchers show how it is possible to temper the conflict level by performing a structured value analysis.

Three main groups of values

Wenstøp and Koppang show how it is possible to sort the organisation’s values into three different groups, based on an ethical main principle and emotional potential:

The core values are based on virtue ethics and have a high emotional potential. Examples of core values are: integrity, honesty, respect, diversity, openness and justice.

Protected values are based on duty ethics and are upheld through laws, regulations, standards and procedures that require no emotional involvement as long as the rules are complied with.

Created values are the reason for the stakeholders’ participation and thus the very existence of the organisation. Such values may include return to shareholders, jobs in the local community or employee wages. It is usually necessary to balance the various stakeholder interests, and that requires tempered emotions.

Five tips for making better decisions

The researchers also propose five ethical rules for operations research analysis of value conflicts. An operation analyst should:

-Be aware of and act in accordance with how the results of the analysis will be used. She cannot disclaim responsibility for the decisions that are made, but is ethically responsible.

-Promote the view that stakeholders have intrinsic value and should not be treated instrumentally.

-Be conscious that good decision-making requires temperate emotions that balance affect and deliberation.

-Promote focus on consequences rather than virtues and rules.

-Encourage fair processes to identify stakeholder values.

Source: BI Norwegian School of Management

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