Managing Uncertainty exam study guide Essay

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Managing Uncertainty Exam

Layout
4 questions – choose 2
1 page per answer
The questions will cover: definitions, theory, concepts
No trick questions
Use examples in answers

Relevant chapters:
-Origins of Wealth 1 & 6
-Use ascent of money for definitions/examples

The Cynefin Framework

Definitions

Basic Patterns of Complexity

Emergence and Self-Organisation
Macro-systems that come into existence due to actions of many (seemingly unrelated) agents
Example: Traffic in India/ market price

Connectivity
Everything is interconnected
Important because anything done by an agents could affect everything else in the system
Example: changes the temperature of one ocean will eventually affect all 7. Burglary reduced due to cheap labour in china. Stuff wasn’t worth stealing anymore

Non-Linearity
Effect is not directly proportional to the cause
Example:

Feedback Effects
Negative feedback effects balance the system, meaning that there is no change.
Positive feedback effects amplify the change, think snowball effect. (Viral marketing)
Example: Negative: snowball rolling down a snowy hill. Positive: Media’s effect on Lehman

Chaos
Immeasurable elements in the system at the time of its creation, which could lead to huge fluctuations in the final emerging conditions
Example: butterfly effect

Tipping Point
The point where a system changes from one state (of being) to another. (The straw that broke the camel’s back)
Example: Downfall of Lehman Brothers

Path-Dependency
Past actions create structures, which lead to the development of constraints in the system.
History matters. There is always context. You never start from zero.
Example: redoing or building a new underground line

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Human Cognition

Perfect Rationality: Spock

Framing Bias
Context the information is given in (can be used to influence resulting conclusions).

Representativeness
Drawing big conclusions from very small/biased samples. (Does not have full information)

Availability Bias
Basing conclusions on easily accessible information

Difficulty judging risk
Miss-assessing Threats & Probability (due to our…