Managing Uncertainty exam study guide Essay

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Managing Uncertainty Exam

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


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

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

Effect is not directly proportional to the cause

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

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

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


Human Cognition

Perfect Rationality: Spock

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

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…