Question

USE DECISION-ANALYSIS TOOLS

Researchers have found that linear models produce superior predictions than experts across an impressive array of domains. In addition, research has found that more complex models produce only marginal improvements above a simple linear framework.

- Why linear model is valuable in terms of decision making?

- How can you use/apply this information going forward in your decision-making?

** Write 200 words response

Answer 1

Answer: The linear models in the decision making like the linear regression model are very helpful and useful in decision making. Models like the linear regression model provide weights to the variables which are used for predicting the outcomes. These variables and weights are selected in such a way that they optimize relationship between the criterion and the production. In this way they help in the more accurate decision making. They are very helpful in understanding and making decisions in the areas related with the consumer behavior, pricing and promotion of the products, evaluation of trends and for making forecasts. These models help in decision making as it help in the binding together of the information and material flows inside the organizations. These statistically derived results help the intuition of the decision makers to make more accurate predictions and make better decisions. Thus liner models can prove to be a very useful tool for helping in the decision making process. The managers can use such models for assisting their intuition with the support of the statistical findings. The managers can analyse the trends as predicted by these models and combine them with their experience to arrive at better and informed decisions.