In this episode, we consider how engineers deal with ambiguity, uncertainty, and risk.
Carmen would be willing to take a 50/50 shot at $1001 tomorrow over a certain $500 today. Most people are risk-averse when dealing with gains, and would take the sure money.
According to the article “The Five Neglects: Risks Gone Amiss,” (Berger, Brown, Kousky, and Zeckhauser, 2009) rational decision-making is a difficult process. It requires accurate estimations of probability, correct valuation of potential benefits, proper use of statistics, consideration of all available alternatives, and evaluation of external effects.
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A 1993 article titled “Choice over Uncertainty and Ambiguity in Technical Problem Solving” (pdf) considers how engineers might change their problem-solving approach based on the relative levels of risk, uncertainty, and ambiguity.
In the previous episode titled “Value,” guest James Travelyan talked about engineers not feeling like they were being productive unless they were carrying out computations, or making design decisions.