Deciding Not To Decide

Florian Ellsaesser Frankfurt School of Economics and Finance Guido Fioretti University of Bologna Gail E. James Gail James contributed a unique series of cognitive maps with her PhD thesis at University of Colorado, Boulder, 1996. We would like to have her as a co-author. If anyone knows where she is, please contact us. Abstract Sometimes unexpected, novel, unconceivable events enter our lives. The cause-effect mappings that usually guide our behaviour are destroyed. Surprised and shocked by possibilities that we had never imagined, we are unable to make any decision beyond mere routine. Among them there are decisions, such as making investments, that are essential for the long-term survival of businesses as well as the economy at large. We submit that the standard machinery of utility maximization does not apply, but we propose measures inspired by scenario planning and graph analysis, pointing to solutions being explored in machine learning. We wish to thank Jochen Runde and Jean Czerlinki for helpful comments and remarks on previous versions of this manuscript. Introduction Sometimes, unexpected events destroy certain causal relations that used to provide a few firm signposts in spite of all uncertainty involved in managing a business.