These are the slides from the follow-up dialog on Emotions and DA with discussants Eyas Raddad, Elayne Ko and Somik Raha.

1. Summary
Emotions and DA
Somik Raha, Ulu Ventures
June 20, 2018 (SDP Webinar Invited Talk, Best of DAAG 2018)

2. Over 4 decades of Behavioral Economics has shown that
we make mistakes in decision-making because of biases
Amos Tversky
1937-1996
Daniel Kahneman
Nobel laureate
Heuristics & Biases
(1974)
43,953 citations
International
best-seller
Page 2

3. –Antonio Damasio, P17, Descarte’s Error
For a long time, most everybody, John Harlow (Gage’s
doctor) included, believed, “the portion of the brain
traversed, was, for several reasons, the best fitted of
any part of the cerebral substance to sustain the
injury.” … Nothing could be further from the truth
Page 3

4. U N A B L E T O D E C I D E
P R O P E R L Y
( E S P E C I A L L Y
P E R S O N A L & S O C I A L
M A T T E R S )C O G N I T I V
E A B I L I T Y
M E M O R Y
( S H O R T
A N D L O N G -
T E R M )
A R I T H M E T I C
A B I L I T Y
N E W
L A N G U A G E
A B I L I T Y
A L T E R N A T I V E
-
G E N E R A T I O N
A B I L I T Y
P A S S E D S P E C I A L
T E S T S F O R
F R O N T A L - L O B E
D Y S F U N C T I O N
A T T E N T I O N
& W O R K I N G
M E M O R Y
N O M O R E S T R O N G
E M O T I O N S
C A N R E A S O N
T H R O U G H
P R O B L E M S , J U S T
N O T M A K E A
D E C I S I O N
“At the end of one session, after he had produced an abundant
quantity of options for action, all of which were valid and
implementable, Elliot smiled, apparently satisfied with his rich
imagination, but added: ‘And after all this, I still wouldn’t know
what to do!’”
Ref: Descarte’s Error, Ch 3, “A Modern Phineas Gage”
Elliott
“ T O K N O W B U T N O T T O F E E L ”
Page 4

5. What neurobiology tells us about emotion and reason
• Seemingly normal reason can be disturbed by subtle biases
rooted in emotion
• Reduction in emotion may constitute an equally important
source of irrational behavior.
… Antonio Damasio in Descarte’s Error
New view: “The apparatus of rationality, traditionally presumed to be neocortical, does not
seem to work without that of biological regulation [of emotions], traditionally presumed to be
subcortical. Nature appears to have built the apparatus of rationality not just on top of the
apparatus of biological regulation, but also from it and with it.”
Ventromedial Prefrontal
Cortex (shaded region)
Page 5

6. The implicit bottomline
• A good decision is one where you feel balanced and achieve equanimity
• The real value of Decision Analysis is that it helps you cross stormy seas and get to
equanimity
• “Don’t trust your emotions when making decisions; they will misguide you”
I S B A L A N C E / P E A C E / E Q U A N I M I T Y A
F E E L I N G O R A T H O U G H T ?
N O T S O F A S T !
Page 6

7. Feelings can also guide us!
What if… “the purpose of Decision Analysis is to take complexity off
the table so we can focus on who we want to be?”
What if… it only becomes possible to decide when we can FEEL,
and we can’t FEEL our way through when facing complex
decisions?
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8. Luminous Metrics
Shine a bright practical light on
the situation
Numinous Metrics
e.g. # of referrals from
entrepreneurs we didn’t fund
e.g. 10X PWMOIC
e.g. % participation e.g. Amount of money raised
Easy to “feel” spirit Needs intellectual explanation
Tend to involve
non-financial capital
When seen in isolation,
can be exclusively associated
with financial capital
Drive your spirit and driven by it
http://www.dailygood.org/story/1260/unlocking-
multiple-forms-of-wealth-nipun-mehta/
Page 8

9. TALK A LITTLE ABOUT VALUE-MAPPING
For more details, see:
https://tinyurl.com/dqcourse
Page 9

10. Page 10
A perspective on the evolution of
emotions and decision analysis (DA)
SDP Webinar
August 22, 2018
Elayne Ko
Director
Portfolio and Decision Analysis (PDA)
Pfizer

11. Important note
The information provided and opinions expressed by the presenter and set forth in the following
slides are those of the individual presenter and should not be attributed to Pfizer Inc., any of its
affiliates, or any of its or their directors, officers or employees, nor any other organization with
which the presenters may be affiliated.
Examples and figures provided herein, including strategies, goals, targets, and indicators, are for
illustrative purposes only and should not be regarded as representative of Pfizer’s portfolio
Except as noted herein, content in this presentation is the intellectual property of the individual
presenter and subject to protection under the copyright laws of the United States of America and
other countries.
Page 11

12. Initial view
Page 12
Bad Good
Defined process
Impartial / objective
Data / fact-based
Analytical
Quantitative models
Undefined process
Subjective
Little or no data
Intuition, “gut”
Qualitative
Decision / decision-making

13. DA application:
potentially exacerbating the issue
Page 13
• Adaptation from Economics and Finance:
– Assumes risk-neutral utility maximizers
– Objective function = maximize monetary value
– Leverage portfolio management and valuation approaches, e.g.,
discounted cash flow (DCF)
• Additional focus:
– Corporate responsibility
– Sustainability

14. A dichotomous world:
Emotions affiliated with personal decisions?
Page 14
Personal Business
Multiple conflicting objectives
Significant impact:
self and others
Large upfront investment
Long investment timeframe
Significant uncertainties
Medical decisions
College / career decisions
Pharmaceutical
Oil & gas
Examples
Decision types
Characteristics
e.g., maximize duration and
magnitude of life’s goals
Maximize monetary valueObjectives

15. Questions to ponder
Page 15
• Requisite decision models1:
– A decision model is defined as a model whose form and content are
sufficient to solve a particular problem
– The model can be considered requisite only when no new intuitions
emerge about the problem
• Emotions:
– Specific to decision types?
– Inherent in decision problems?
1
Source: Phillips, L. D., “Requisite Decision Models”, Acta Psychologica, 56 (1984)

16. Connecting emotions and DA
Page 16
• Senior management, project team members are human beings with
emotions
• Somik Raha’s DAAG 2018 Emotions and DA presentation1
Emotions Data, logic,
algorithms
Disoriented,
unable to decide
Data, logic,
algorithms
Emotions
Cannot form preferences,
unable to decide
1 Based on the Emotions and DA presentation by Somik Raha at the DAAG 2018 conference & June 2018 SDP Webinar

17. Illustrative example:
Decision to invest in high-risk, high-return compound
Page 17
Decision
Uncertainty
Endpoint
30%
$525M
Low
40%
$2,025M
Base
30%
$4,525M
High
Commercial
85%
$2,325M
Success
15%
-$475MFail
Regulatory
20%
$1,905M
Success
80%
-$450MFail
Phase 3
$21M
Yes
$0MNo
Decision:
investENPV =
$21M
1
2
3
4
5
6
Risk profile data
Percentile NPV ($’M)
1 475
10 -450
50 -450
90 2,025
99 4,525
Font in italics denote expected value calculation

18. Illustrative example:
Decision to progress back-up compound
Page 18
q
Success
1-q
Failure
Back-up compound
p
Success
q
Success
1-q
Failure1-p
Failure
Lead compound
Yes
p
Success
1-p
Failure
No
Decision: progress
back-up compound
1
2
3
4
5
6
Discussion
Minimal
Concern: angst
Minimal
Focus: limited value add
Minimal
Highlight: mitigation
Decision
Uncertainty
Endpoint

19. Complexity of emotions
Page 19
6 universal categories
Happiness
Sadness
Anger
Surprise
Fear
Disgust
Cowen A. S. and Keltner D. Self-report captures 27 distinct categories of emotion bridged by continuous gradients, Proceedings of the
National Academy of Sciences of the United States of America (PNAS), Sept 2017
27 distinct categories
of emotions
Admiration
Adoration
Aesthetic appreciation
Amusement
Anger
Anxiety
Awe
Awkwardness
Boredom
Calmness
Confusion
Craving
Disgust
Empathic pain
Entrancement
Excitement
Fear
Horror
Interest
Joy
Nostalgia
Relief
Romance
Sadness
Satisfaction
Sexual desire
Surprise
Anwar Y. How Many Different Human Emotions Are There? The Greater Good Magazine, September 8, 2017

20. Incorporating emotions into DA process
Page 20
Framing,
structure
decision
Collect data
inputs
Develop
evaluation
model
Analyze and
interpret
Recommend
decision
Define objectives Identify sensitivity
analysis
parameters
Data interpretation
and biases
Achieve
equanimity1
Risk aversion /
risk seeking
1 Based on the Emotions and DA presentation by Somik Raha at the DAAG 2018 conference & June 2018 SDP Webinar
Clarity of thought to
clarity of action
• DA may help highlight areas of concern
• Emotions can be used as an “input” towards requisite decision
model
DA process shown is based on Howard, R. A. (1988). Decision Analysis: Practice and Promise. Management Science, 34(6), 679–695

21. Business context:
emotions and DA
Page 21
“A good decision is an action we take that is logically consistent
with the alternatives we perceive, the information we have, and
the preferences we feel ”1
1 Howard, R. A., “Decision Analysis: Practice and Promise”, Management Science, 34, 6 (June 1988)

22. Emotions and DA
Interactive dialogue
SDP Webinar
August 22, 2018

23. Questions from SDP June Webinar:
Question 1
What rebiasing techniques should we think of to compensate for debiasing going too
far?
Page 23

24. Questions from SDP June Webinar:
Question 2
Can the panelists offer practical instances of use of this approach in their DA projects?
Page 24

25. Outdoors
Porch
Indoors
$26
$40
$46
Sun
Rain
Sun
Rain
Sun
Rain
0.4
0.6
0.4
0.6
0.4
0.6
$100
$0
$90
$20
$40
$50
1
0
0.95
0.32
0.57
0.67
u-value (preference probability)
u = 0.40
u = 0.57
u = 0.67
Preference Probabilities offer a normative space for our emotions
Ref: Page 201, Foundations of Decision Analysis, Ronald A. Howard and Ali E. Abbas
Page 25

26. Questions from SDP June Webinar:
Question 3
Provide examples illustrating how you did things differently in applying Decision Quality
2.0 concepts?
I believe a good decision must make sense (head) and feel good (heart/emotion). What
best practices have you found to bring both into consideration?
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27. For more details, see:
https://tinyurl.com/dqcourse
Page 27

28. Questions from SDP June Webinar:
Question 4
I liked the brushing [teeth] twice a day metric example. Can you provide similar
examples of good metrics to get groups to appropriate action in implementing DA
decisions?
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29. Submitted questions
Question 1
Use of / mitigating “emotions” in corporate setting:
If we acknowledge that “emotions” are likely involved, important and/or necessary in
decision-making (especially with respect to values and preferences), how can / should
we bring that realization into corporate decision-making where clear corporate values
are likely already established and/or fiduciary responsibilities exist?
Should we be aware and trying to mitigate the implications of “emotions” or should we
recognize the role of emotions and (somehow?) leverage emotions to better enable
Decision Quality?
Page 29

30. Submitted questions
Question 2
Values in established / corporate setting:
Value mapping and preferences have an obvious role in personal decision-making and
possibly in new organizations where values are not established.
However, how and when should we explore or revisit values in a well-established
organization or corporation?
Are there situations or specific times in which a well-established organization
(especially a corporation) should be revisiting or reviewing their core values?
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31. Submitted questions
Question 3
Somatic Marker:
If “gut reaction” is an automatic reaction “connected, by learning, to predicted future
outcomes of certain scenarios: and emotions are an “apparatus for learning” that “help
us develop an internal predictive model”, how do we know when to leverage that
internal predictive model and when that internal predictive model could be leading us
astray?
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32. Take questions from participants
Page 32

33. Further questions
Can you shed some light on how value mapping process looks like?
Page 33

34. Further questions
I can understand how our emotions help guide our value metrics in a decision
opportunity. How does/should emotions manifest in other parts of the decision analysis
process like creating alternatives?
Page 34

35. Further questions
It is understandable that engaging emotions in personal decisions makes it more
meaningful. How can personal emotions be engaged in group/organizational decision
making?
Page 35