International Conference on Global Interdependence in Decision Sciences
28-30 December 2009 Opening Remarks by the Director General, ASCI
Shri S.R. Rao, Prof Chandrasekhar, Distinguished participants from India, Georgia, Hong Kong, Korea, New Zealand, Portugal, Thailand, the USA, the United Arab Emirates, and fellow participants from ASCI:
It gives me great pleasure to add my words of welcome to those of Prof Chandrasekhar to all of you who have come from far and near to participate in this Conference. You represent diverse disciplines, backgrounds and countries – and, apart from promoting contact and friendship across borders, this diversity can only enrich the quality of discussions at this Conference.
I am particularly pleased that we have with us Sri S.R. Rao, Additional Secretary to the Government of India, to whose Inaugural Address we greatly look forward to listen.
And we have many distinguished civil servants or academicians or scientists – Prof Karuna Jain, Sri Naresh Kumar, Prof Indrani Bose, Prof Raj V. Ponnaluri - who shall be addressing the full gathering after tea break following this inaugural session.
Decision Sciences are an important breed of our thought. They are relevant to a wide number of areas in which, one way or the other, we are confronted with the task of taking decisions that have a profound impact on our lives.
A particular challenge that we, as managers and policy makers, face is how to formulate some approaches to deal with the problem of decision making under conditions of uncertainty.
This is a problem that is most particular in the context of social, rather than, natural, sciences. Following Karl Popper, as George Soros, the Fund Manager, observed, ‘in natural phenomena, there is a causal chain that links one set of facts directly with the next’. In social affairs, however, the course of events is more complicated – as human beings have both a cognitive role and a manipulative role: that is to say, human beings, as participants, both seek to understand the situation they are in, and influence it at the same time. This leads to uncertainty, for we cannot always predict with certainty how human beings will react in any situation.
Part of the uncertainty is rooted in imperfect understanding of the situations in which human beings are operating, and also because of the indeterminacy of the impact of one participant’s decision on the other and the complicated loops of reaction that it results. We are, therefore, forced to operate in an environment that is indeterminate to different degrees – as can be seen in the behaviour of financial markets.
John Maynard Keynes, the British economist, who started his academic life by doing the Mathematics Tripos at Cambridge, and wrote a ‘treatise on probability’, was much seized with the question of whether one can take rational decisions in conditions in which it is not possible to determine numerically definite possibilities of future states of the world – that is under conditions of ‘uncertainty’, that typically inform the social condition of human beings.
As we all know, a difficulty with establishing numerically definite possibilities or mathematical expectations about the future course of events is that the ‘inductive’ or the frequency theory of probability is possible only when we have either the historical data to garner lessons from, or can conduct experiments, and note the results.
However, even when we have such results at our disposal, we cannot, alas, assume that human beings have not learnt from their previous experience, or that they will behave in exactly the same way as they had previously behaved, because humans learn from experience.
We often assume that there is full information before making a decision, but full information is often a rarity in life.
There is also the difficulty that where knowledge is available, the inductive knowledge that we have can only cover the situations that have already happened – not to situations that are in the realm of possibility but have not yet happened.
The question, then, is: is it possible to have a framework in which one can take decisions which one can consider ‘rational’ or ‘reasonable’?
Keynes’ view is that in such situations, it is quite legitimate to supplement ‘inductive probability’ with ‘intuitive probability’. That is, given the range of situations that one is likely to confront in which there is no evidential weight necessarily available to guide us, we have to use our intuition on how events might shape up given our knowledge of the material and human world.
Indeed, the use of conventions to fill in the gaps left by numerical weights of probability is an instance of this.
He also attached weight to the general state of ‘pessimism’ or ‘optimism’ – or what he called ‘the animal spirits’ – in a nation in understanding or predicting the course of future events, and, therefore, for taking decisions on what to do in the present – for example, whether to take a risk in undertaking investment or not.
I believe the approach of Keynes to dealing with decision making under conditions of uncertainty has implications for contexts other than narrow economics.
We should also remember that, when we face a multiple choice of options, there is a cost to not taking decisions on the ground that we do not know whether we are taking the right decision or not!
I believe it is for reasons such as these that we see many societies fall back on conventions – such as using the astrological calendars that set out what are auspicious or not auspicious moments. There may be considerable risk associated with these decisions, but it is better than the risk of not taking any decision at all!
I would like to conclude by wishing the Conference every success. And I hope all of you will have an enjoyable and fruitful stay at ASCI.
