Managing uncertainty in new product development: Introducing Ronald Heiner's theory of decision making? Working paper series--07-07

Summers, Gary J. and Scherpereel, Christopher M. (2007) Managing uncertainty in new product development: Introducing Ronald Heiner's theory of decision making? Working paper series--07-07. Working Paper. NAU W.A. Franke College of Business.

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Abstract

Should decision makers respond to uncertainty by increasing or decreasing flexibility? Can simple decision rules outperform sophisticated ones? Is the maximization of net present value the correct decision rule for all levels of uncertainty? How are uncertainty, flexibility, and performance related? Heiner's new theory of decision making under uncertainty can answer these questions. Whereas traditional decision making approaches, such as decision analysis and financial theory, consider uncertainty arising from imperfect information, Heiner's theory considers uncertainty arising from both imperfect information and imperfect behavior. The inclusion of imperfect behavior explains much about product development. This paper introduces Heiner's theory to the product development literature. After explaining Heiner's theory, we demonstrate its usefulness to theory and practice, by deriving 10 principles for improving product development.

Item Type:	Monograph (Working Paper)
Publisher’s Statement:	Copyright, where appropriate, is held by the author.
ID number or DOI:	07-07
Keywords:	Working paper, decision making, decision theory, imperfect behavior, imperfect information, product development
Subjects:	H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
NAU Depositing Author Academic Status:	Faculty/Staff
Department/Unit:	The W.A. Franke College of Business
Date Deposited:	18 Oct 2015 00:12
URI:	http://openknowledge.nau.edu/id/eprint/1539

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