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Feduzi, Alberto and Runde, Jochen (2014) 'Uncovering Unknown Unknowns: Towards a Baconian Approach to Management Decision-Making.' Organizational Behavior and Human Decision Processes, 124 (2). pp. 268-283.

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Abstract

Bayesian decision theory and inference have left a deep and indelible mark on the literature on management decision-making. There is however an important issue that the machinery of classical Bayesianism is ill equipped to deal with, that of “unknown unknowns” or, in the cases in which they are actualised, what are sometimes called “Black Swans”. This issue is closely related to the problems of constructing an appropriate state space under conditions of deficient foresight about what the future might hold, and our aim is to develop a theory and some of the practicalities of state space elaboration that addresses these problems. Building on ideas originally put forward by Bacon (1620), we show how our approach can be used to build and explore the state space, how it may reduce the extent to which organisations are blindsided by Black Swans, and how it ameliorates various well-known cognitive biases.

Item Type: Journal Article
SOAS Departments & Centres: Departments and Subunits > School of Finance & Management
Legacy Departments > Faculty of Law and Social Sciences > School of Finance and Management
ISSN: 0749-5978
Copyright Statement: © 2014. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
DOI (Digital Object Identifier): https://doi.org/10.1016/j.obhdp.2014.04.001
Date Deposited: 14 Apr 2014 15:50
URI: https://eprints.soas.ac.uk/id/eprint/18330

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