"The moral of the story is that when people must make decisions without perfect information, they will make mistakes. The fact that decisions turn out wrong does not by itself condemn the decision-making process. The fact that doctors sometimes under-treat and sometimes over-treat does not prove that for-profit medicine is worse than socialized medicine. The fact that some terrorists elude detection and some people get put on terrorist watch lists by mistake does not prove that watch lists have no value. The fact that some potentially good mortgage borrowers get turned down and other borrowers go into default does not prove that regulators could do a better job of making mortgage lending decisions.
To make improvements in these areas requires more sophisticated analysis...
The best improvements come from introducing better information into the decision-making process."
This article should be required reading for pretty much everyone. Kling has presented some foundational decision theory in a very approachable way; and he accurately notes that uncertainty always leads to uncomfortable trade-offs ... leading inexorably to questions of costs, benefits, and risks.
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