It’s random. We don’t know what’s going to happen. How can we make a decision?
Risk, uncertainty. There are a couple things you can do. One is to compute and compare expected values for your alternatives. Break it down, use historical data, bring in your knowledge of the problem context. This gives you the option that will be best on average.
But that’s not enough. You also need to consider risk. What else could happen? This requires a feel for randomness. Patterns will appear that mean nothing. Averages won’t be respected. Things that are “due to happen” don’t. Things that are “almost certain” fail to happen. It helps to play around with Excel’s random number generator.
In my new class, Beginning Probability, gives you both the skills to compare expected values and a feel for the weirdness of random. No math required beyond basic arithmetic. This is a class for absolute beginners. You don’t even need Excel, but it’s more fun if you do. Check it out.
