Searching for the very best decision
Decision analysis combines economics, mathematics, statistics and psychology, tell Jeffrey Keisler (left) and Ahti Salo.
What should a company do when there are ten promising research and development projects, but enough money in the budget to finance only three of them? And how can a city decide whether it is best to invest the tax money in supporting home care for elderly people or in building new sheltered housing?
‘Trying out possibilities one at a time is a bad idea; that way you end up doing less with the same resources,’ summarises Professor Jeffrey Keisler from the University of Massachusetts. Keisler, who was awarded the highly esteemed Fullbright-Aalto University Distinguished Chair grant, will work at Aalto University for six months as Ahti Salo’s guest. These two men have worked in cooperation for a long time and share a common specialisation, decision analysis, which is a discipline that combines economics, mathematics, statistics and psychology and aims to help anyone make better decisions.
‘It can be utilised in business strategies, investing, drawing up government programmes, managing technology,’ Keisler lists the possibilities.
‘It’s a combination of theory and practice with the aim of helping people to be disciplined when they make the best possible choice,’ he summarises.
Diplomacy through scholarship
During his six-month visit to Aalto University, Jeffrey Keisler will organise two courses in cooperation with Ahti Salo. One of them is targeted at Master’s level students at Aalto University and the other one to doctoral candidates. The topic in both is portfolio decision analysis, the subject on which the men have also co-edited the award winning book Portfolio Decision Analysis – Improved Methods for Resource Allocation.
‘What portfolio decision analysis is especially suitable for is situations in which we have to choose a course of action which coordinates numerous decisions, each with its own separate alternatives. On the Master’s level course, the focus is on how we can make decisions that are of the best possible quality; with doctoral candidates we concentrate on how the methods in portfolio decision analysis can be utilised in decisions related to one’s own research and, for example, in the publication process,’ Keisler explains.
‘In addition to the School of Science, the School of Engineering and the School of Business have also supported Jeffrey’s visit financially,’ emphasises Ahti Salo.
‘This is a good example of close cooperation, and we do hope to see students from as many fields as possible on the Master’s level course. Portfolio analysis is useful in both development of new technologies and setting up a business – it is best to join the course with an open and curious mind,’ he encourages the students.
This is like MIT, in which the disciplines important to us are represented, from engineering to mathematics and technology.
During the six months, Jeffrey Keisler and Ahti Salo also aim to pubish joint papers on the platform economy, whose opportunities and challenges for Finland a strategic research project headed by Salo currently investigates. Companies like Uber and Airbnb have already shaken up the models of business, but how should companies’ boards meet new challenges?
‘One of our articles focuses especially on how the technology-based platform economy grows and how this growth can be best promoted in a sustainable way. Making the right decision is not always easy when the profits, jobs as well as the benefit experienced by the customer hang in the balance,’ Keisler contemplates and adds that Aalto University’s many disciplines make it a great place for a decision analyst.
‘This is like MIT, in which the disciplines important to us are represented, from engineering to mathematics and technology,’ he says happily.
‘It is great to be able to have a renowned expert like Jeffrey working here at Aalto University. This is the best kind of example of the diplomacy the grant makes possible,’ says Ahti Salo and smiles.
Professor Ahti Salo
Tel. +358 050 383 0636
More information about the courses
Fulbirght Center and its funding opportunities