Irrational Economist_ Making Decisions in a Dangerous World - Erwann Michel-Kerjan [14]
The essence of the rule I wish to suggest here is to “commit only as far as you can predict.” The rationale for this rule was suggested to me by the old joke about a Japanese Airlines pilot who ditched his aircraft in the bay at the San Francisco airport after a flight from Tokyo. “Why did you miss the airport by 200 yards?” a journalist asked. “Well,” replied the pilot, “considering I came all the way from Tokyo, 200 yards was not much of an error.”
The insight provided by this story is that, normally, when making commitments (here, where to land), a person should match actions with the level of uncertainty that can be managed. Thus, when leaving Tokyo, the pilot was foolish to commit to the precise parameters for landing in San Francisco; all he should have done was to select a path that could be adapted as conditions changed. When close to San Francisco, however, he could commit to a particular landing spot because at this proximity there would be considerably less uncertainty about the specific parameters. In short, the level of commitment should be matched to the level of uncertainty.
What are the implications of this pilot metaphor for future-choice decisions? First, many future-choice decisions have a temporal structure—similar to that of the Tokyo-San Francisco flight path—that can be broken down into several segments. Consider, for example, the many scenarios involved in urban planning or career development. However, in contrast to the Tokyo- San Francisco flight, which has a precise goal (i.e., arrival at a specific spot in San Francisco), the end-states of these future-choice decisions are not necessarily well defined. On the other hand, they undoubtedly are driven by a “direction” or values (e.g., creation of a viable city, achievement of personal and professional success). The important point here is that the time line of all these decisions can be broken down into periods for which it is reasonable to make commitments that can be evaluated.
FROM AIRPLANES TO FOGGY MINEFIELDS
Although it makes this point, the pilot metaphor is too simple for many realistic future-choice decisions. So, instead, I would like to introduce the metaphor of traveling across a minefield in a fog. The general goal—as in life—is to get across the field in good shape, and let’s assume that in crossing the field there are various positive rewards that you can collect. But at the same time, your ability to see where you are going is restricted—randomly—by the density of the fog so that, whereas you might be able to see quite far in some cases, this is not always going to be the case. The mines, too, are distributed randomly around the field and vary in terms of how much damage they can inflict. In other words, whereas some are “coconuts,” others might be quite containable. Let’s say you also have some diagnostic mine-detecting equipment but this is not 100 percent reliable and may be biased for some types of mines.2
In the foggy minefield, the goal cannot be precise—it’s just to get to the other side in the best possible condition. As for sub-goals, these are going to vary considerably depending on the state of the fog when you make any particular commitment. How, then, should one act?
It should be clear that decision making in the foggy minefield cannot be modeled easily by, say, some form of dynamic programming. The reason is that the characteristics of the environment are not known in advance but are only revealed as you advance. (Sure, you can