KDnuggets : News : 2006 : n14 : item16 < PREVIOUS | NEXT >

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Subject: NYT: Maybe We Should Leave That Up to the Computer

By DOUGLAS HEINGARTNER, Published: July 18, 2006

AMSTERDAM � Do you think your high-paid managers really know best? A Dutch sociology professor has doubts.

The professor, Chris Snijders of the Eindhoven University of Technology, has been studying the routine decisions that managers make, and is convinced that computer models, by and large, can do a better job of it. He even issued a challenge late last year to any company willing to pit its humans against his algorithms.

"As long as you have some history and some quantifiable data from past experiences" Mr. Snijders claims, a simple formula will soon outperform a professional's decision-making skills. It's not just pie in the sky, -- he said. "I have the data to support this."

Some of Mr. Snijders�s experiments from the last two years have looked at the results that purchasing managers at more than 300 organizations got when they placed orders for computer equipment and software. Computer models given the same tasks achieved better results in categories like timeliness of delivery, adherence to the budget and accuracy of specifications.

Mr. Snijders�s work builds on something researchers have known for decades: that mathematical models generally make more accurate predictions than humans do. Studies have shown that models can better predict, for example, the success or failure of a business start-up, the likelihood of recidivism and parole violation, and future performance in graduate school.

They also trump humans at making various medical diagnoses, picking the winning dogs at the racetrack and competing in online auctions. Computer-based decision-making has also grown increasingly popular in credit scoring, the insurance industry and some corners of Wall Street.

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KDnuggets : News : 2006 : n14 : item16 < PREVIOUS | NEXT >

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