Cost of Postponing V.o.I. Conference is Outweighed by the V.o.I. of Doing So
Join us for a Conversational Webinar with Ron Howard, the Inventor of V.o.I.
by Sam L. Savage
Stanford’s Ronald A. Howard, Inventor of the Value of Information
As of January 30th 2020, there was huge uncertainty in the future evolution of coronavirus infections worldwide (see my recent blog post on the topic). This provided the management team at ProbabilityManagement.org with a perfect case study in the Value of Information as applied to our Value of Information conference scheduled for April 21 - 22. Because uncertainty is the nonprofit’s stock-in-trade, our readers may be interested in how we have attempted to turn the lemons of this uncertainty into lemonade.
This story begins with my father, Jimmie Savage, who had laid the foundations for what would later be called Decision Analysis (DA). However, I had never taken a class in DA, nor had I heard of Stanford’s Professor Ronald A. Howard, one of its founding fathers, and inventor of the Value of Information. A casual conversation with Ron shortly after I arrived at Stanford in the early 1990s set off resonances with scores of dinner table conversations from my childhood and I decided to sit in on his class. Just as you can see the minute hand move on a very large clock face, I could feel myself getting smarter with every minute of lecture. Like everyone else I know who took Ron’s course, I cannot imagine where I would be today without it.
Influence Diagram
To me the most beautiful and unexpected concept from the course was the Value of Information (see my blog post). It is defined as the expected economic benefit you would receive through a particular reduction in uncertainty.
Ron wrote a short guest essay for my book on The Flaw of Averages which I will quote directly in discussing our decision- making process. I will also make use of another of his inventions, the Influence Diagram. Quoting from Ron:
“When you really think about it, the three elements of any decision are alternatives, information, and preferences. I like to think of a three-legged stool because, if any one of these is missing, you really don’t have a decision. If you don’t have any alternatives, you don’t have a decision.”
For us, the alternatives for our April V.O.I. conference were:
Do nothing and hope for the best.
Do a hybrid conference which people could attend either live or online, and switch to completely online if things got really bad.
Postpone the conference.
orDo something else (read on)
“If you don’t see a connection between what you do and what’s going to happen — that’s the information — you don’t have a decision.”
The information we were lacking was:
How was the contagion going to progress?
andHow would other organizations and individuals behave in the face of this uncertainty? That is, would our speakers and attendees be unable to make the conference?
“And if you don’t care what happens, you can do anything and it doesn’t make any difference. So you need all three.”
Care? Are you kidding? Since 2014, our Annual Conference, the brainchild of board member Michele Hyndman, has been the heart and soul of ProbabilityManagement.org, and all our team has poured tremendous effort into the upcoming April conference. Furthermore, the numerous speakers and attendees were all eagerly looking forward to the event. For the umpty-umpth time, risk is in the eye of the beholder, and we had a lot of stakeholders to consider.
The Influence Diagram
In 1981 Ron and co-author James Matheson invented the influence diagram, also known as the Bayesian network, to visualize and aid with decisions. Although our group did not explicitly start with such a diagram, I had one in my head from the start, which I have graphed above.
1. The Alternatives Box (the potential decisions)
We needed to act quickly enough so our speakers and attendees could plan their travel, but obviously could not wait to see how the disease would play out. All we had was the information on how others, rational or not, were reactive to the same uncertainties. So, the influence arrow going into the Alternatives node comes solely from the Behavior Uncertainty node.
2. The Uncertainty Nodes
The actual progression of the contagion would clearly impact both people’s behavior and the conference itself. The behavior node would impact both our decision and the success of the conference.
3. The Stakeholder Satisfaction Node
This would be impacted by what we decided to offer, whether or not an organization would send a speaker or attendee, and of course the state of the contagion in April.
How We Decided
First, we faced up to the uncertainty early and had begun researching our various alternatives. It pays to be proactive rather than reactive in the face of uncertainty.
Second, we had been negotiating with Ron to speak at the April conference, and because of the high value of his time, we gave him the option to accept up to March 1st. When I phoned him to get his decision, I discovered that he had an attractive offer to speak overseas, but he was not eager to do any public speaking due to the potential exposure to the coronavirus. I pointed out that we didn’t need to get his protons and neutrons down to San Jose but could just do it all with electrons and photons. So, he agreed, for which we are deeply thankful.
Third, information began to come in that reduced the uncertainty; speakers began to contact us saying that their organizations would not allow them to travel. This information had tremendous value. First, it involved some prominent speakers whose absence would diminish the value of the conference, and second, we knew that like the first few kernels of popcorn that go off in the microwave, many others would follow. This removed alternative 1: “Do nothing and hope for the best.”
Fourth, alternative 2, to offer the entire two-day conference online, had its own uncertainties and a big potential downside if it did not result in a satisfactory experience. Our final decision was to kick off a series of webinars on the Value of Information with Ron during the week of April 20 and postpone the live conference. More details on the webinars will follow shortly.
Fifth, we expect much of the uncertainty surrounding the epidemic to be resolved in the next couple of months. The value of that information will be that we can make firmer plans for the in-person conference, which we hope to host in the fall.