Smart Choices by Howard Raiffa & Ralph L Keeney & John S Hammond

Author:Howard Raiffa & Ralph L Keeney & John S Hammond [Raiffa, Howard & Keeney, Ralph L & Hammond, John S]
Language: eng
Format: epub
ISBN: 9781633691049
Publisher: Harvard Business Review Press
Published: 2015-07-20T23:00:00+00:00

Resolving a Decision with an Estimate of Uncertainty: Which Flight?

Mark Hata has a dilemma. Months ago, he arranged to take his 62-year-old mother on a week-long trip to London in October. Mark lives in Phoenix, his mother in Pittsburgh. They plan to meet at Dulles Airport in Washington, D.C., on a Saturday evening in time for a leisurely dinner, before taking the 10:00 P.M. flight to London.

But Mark has just learned that his daughter’s soccer team has earned a spot in the league championship game, which is scheduled for 9:00 A.M. that same Saturday, and he would really love to attend. What to do?

Mark sees three alternatives:

1.Attend the game and reschedule his departure to London for Sunday, cutting a day off the trip. (Reticketing would cost $400, but plenty of seats are available.)

2.Stick with the original plan and miss the soccer game.

3.Attend the game and take a later flight to Dulles. If this flight is on time or no more than 30 minutes late, Mark will just have time to meet his mother and make the flight to London. That nixes dinner but otherwise leaves their plan intact.

After some soul-searching, Mark decides he’d rather miss the game than shorten his mom’s London vacation. But should he attend the game and gamble on getting to Washington on time? After more thought, he decides he’d take the chance if the risk of missing the London flight is less than 15 percent.

With his decision boiled down to assessing the probability that he will arrive at Dulles no more than 30 minutes late, Mark checks with his travel agent and learns that Dulles has an 80 percent on-time arrival record, with ‘‘on-time’’ defined as arriving within 15 minutes of the scheduled time. After asking a few more questions of the agent, Mark figures his odds of arriving within 30 minutes are much better than 80 percent, for three reasons. First, many late flights arrive within 30 minutes of the scheduled time. Second, Saturday flights encounter fewer air traffic delays than do weekday flights. And, third, Phoenix has few weather-related departure delays. He concludes that he has at least a 90 percent chance of making the London flight. His choice is now easy, though still worrisome. He attends his daughter’s game—a 2-2 tie, cochampions—and arrives in Washington 15 minutes early. Not only did Mark make a smart choice, he enjoyed a good consequence.

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