Winning the Hardware Software Game Winning the Hardware-Software Game - 2nd Edition

Using Game Theory to Optimize the Pace of New Technology Adoption
  • How do you encourage speedier adoption of your product or service?
  • How do you increase the value your product or service creates for your customers?
  • How do you extract more of the value created by your product or service for yourself?

Read more...

Latest Comments

  • Anonymous said More
    Great explanation for the relationship... Saturday, 19 June 2021
  • Anonymous said More
    nice analysis, thanks Wednesday, 21 October 2020
  • Anonymous said More
    The fact that CBD from marijuana is... Sunday, 14 June 2020
  • Anonymous said More
    This was excellent and extremely... Tuesday, 21 April 2020
  • Anonymous said More
    Well written. Well constructed. Tuesday, 13 August 2019

 A recent article in the NYT, “Weighty Choices, in Patients’ Hands” by Laura Landro, discussed the difficult choices patients face in making healthcare decisions, as treatment options become more complex. Due to the overwhelming nature of the information and the inability of physicians to provide patients with the ins and outs of all their options, some medical services providers are providing patients with “coaches” to help educate them about the upsides and downsides of all the patients’ choices and to help guide them in preparing relevant questions for the patients’ doctors. In the excerpt that follows, I’ve highlighted in blue the results reported in the article for this new patient education process.

… the current health-policy debate comes down to a very personal issue: how to make ever-more-complex decisions when faced with multiple options, each with no clear advantage and with risks and harms that patients may value differently. Preliminary data from the National Survey of Medical Decisions, conducted by researchers at the University of Michigan, showed that doctors are more likely to discuss the advantages of treatments while giving short shrift to the disadvantages. The study also found that doctors often offer their opinion but much less frequently ask the patient’s own opinion.

“There are an increasing number of situations where there is not a clear-cut winner in terms of treatment, and patients don’t get the information they should about side effects and things that could go wrong before making decisions” ... “The result is a huge disconnect between what patients truly care about and what providers feel is most important for patients.”

…Studies show that when patients understand their choices and share in the decision-making process with their doctors, they tend to choose less-invasive and less-expensive treatments than they would have otherwise received.

“We aren’t telling patients to seek lower costs or less invasive procedures, but on average patients are more risk averse than physicians”

…Dr. Stormont felt the video and booklet on prostate cancer were incomplete. They didn’t cover some of the newer treatments …Dr. Stormont agreed to use the programs, but supplements them with his own literature that includes information on newer treatment options. He says he has found that the decision aids help patients and their spouses get better educated about early prostate cancer, so his time with them is “more relaxed, efficient and focused.”

Patients have more realistic expectations about their treatment and side effects and are less likely to seek out second opinions... They also are more comfortable choosing less-invasive treatments after reviewing the decision aids… “On one hand, while I am losing some surgical patients because of this process, on the other, we both are more comfortable that they are choosing the best treatment for them—one that they are more informed about, more comfortable with and less likely to regret later on”...

The situation discussed in the article is known as the Principal-Agent Problem. In this particular application of the problem:

  1. An individual seeks advice
  2. from someone more knowledgeable than he
  3. about some action the individual must take;
  4. the advisor receives payment for the advice given, and perhaps for the action the individual ends up taking,
  5. while it is the individual who bears the ultimate costs and effects of the action he ends up taking.

This type of situation arises almost anytime someone needs to treat a medical condition, resolve a legal issue, invest his life’s savings, buy or build a house, buy or fix a car, etc. The article highlights some important issues to consider when participating in these types of principal-agent or advisor-advisee relationships. More specifically, do the advisor and the advisee share the same goals regarding both where the advisee wants to go and how he wants to get there? What can the person seeking advice do to make sure he is getting "good advice" for him?

There are three big areas someone seeking advice should consider when judging the quality of the advice he is getting:

  • Risk Aversion. People who are risk averse are willing to make some type of payment or sacrifice to reduce the amount of uncertainty associated with the outcome of some future event.

    As it applies to the situations discussed in the article, people who are risk averse about seeking medical treatment would rather go with a less risky procedure, even though they might end up in less perfect health. Regarding investing money, people who are risk averse would rather put their money in CDs and get a guaranteed minimal rate of interest, rather than investing their money in some stock that will possibly earn them a substantial return or possibly lose them some of their money.

    When taking a risk, there are three types of outcomes someone might seek:
    (1) Choose the option that will minimize the chance of something bad happening
    (2) Choose the outcome that will balance the pros and cons
  • (3) Choose the outcome with the best possible upside
      When someone is seeking advice, he should make sure that the advisor understands which of these three types of outcomes, minimizing potential downsides, maximizing potential upsides, or balancing the two, is most important to the recipient of advice. And if the choice is to balance the pros and cons, the advice seeker should ensure that he and the advisor agree as to the relative importance of each of the costs and benefits.
  • Conflicts of Interest: A conflict may arise in the advisor-advisee relationship if what’s in the best interest of the advisor is not the same as what’s in the best interest of the advisee.

    As it applies to the situations discussed in the article, a conflict will arise if the advisor’s income is higher when the advisee takes a particular action. For example, in the case of medical or legal advice, the advisor (physician or attorney) will often earn more money if the advisee pursues a more aggressive course of action (surgery or a lawsuit) as opposed to a less aggressive action (taking medication or trying to negotiate). When this happens, you get the results reported in the article, that is, that advisees tend to be more risk averse than their advisors.

    Recipients of advice should consider whether or not the advisor could have some sort of personal interest in having the recipient take the course of action the advisor is urging. If there is a potential conflict of interest between advisor and advisee, then advisees should consider getting a second opinion from a source that does not have the same potential conflict. Alternatively, advisees can avoid potential conflicts by seeking advice from one professional, while having a different professional actually carry out (benefit from) the action.

  • Expectations Management:An advisor who practices expectations management will make sure his advisee understands all the pros and cons associated with the advisee’s options.

    As it applies to the situations discussed in the article, a physician will practices expectations management if he makes sure his patient fully understands all the possible outcomes, especially the negative ones, associated with a procedure. A advisee who is unexpectedly surprised by an outcome, especially a negative one, wasn’t properly prepared by his advisor.

    Unfortunately, an advisee won’t necessarily know when he hasn’t been fully advised. That is, he won’t know what he doesn’t know. An advisee can try to make sure he is as fully informed as possible by
    • probing his advisor to reveal all the possible outcomes of an event, together with their respective likelihoods of occurring,
    • seeking a second opinion, and/or
    • researching the subject on his own.

When someone receives advice about a complex decision he must make, the person being advised must feel that he is well-informed as to BOTH (1) each of his options, AND (2) the pluses and minuses associated with each. It is only when both of these conditions hold that the decision maker can possibly feel comfortable with taking ownership of and responsibility for his final actions and accept any resulting consequences.

What it generally comes down to is making sure you have become as fully educated as possible as to the ups and downs associated with each of your options before making a complex decision. Unfortunately, it is in those cases that you most need good, impartial advice (those where you know the least) that you’re most vulnerable, and therefore in a position to be taken.

More Blogs

Cannabis Cultivation: Seeds vs. Clones

26-09-2020 - Hits:2495 - Ruth Fisher - avatar Ruth Fisher

Cannabis plants are dioecious, that is, they are either male or female. Plant reproduction occurs naturally, when male plants pollinate female plants, causing female plants to produce seeds. New cannabis plants can thus be cultivated by collecting seeds from fertilized females and replanting them, or by buying seeds generated by...

Read more

Cannabis Cultivation: Indoor vs. Outdoor vs. Greenhouse

22-09-2020 - Hits:2183 - Ruth Fisher - avatar Ruth Fisher

There are three basic locales for growing cannabis: indoors, outdoors, or in greenhouses. Greenhouses enable growers to benefit from natural light, while also being able to strategically block out light to induce quicker flowering. Budget-friendly greenhouse operations are more subject natural climate variations, while higher-end greenhouses are more similar to...

Read more

Would the Endocannabinoid System Have Been Discovered Earlier without the Ban on…

10-06-2020 - Hits:1848 - Ruth Fisher - avatar Ruth Fisher

Cannabis was used medicinally in the Western world from the mid-1800s through 1940, even though doctors did not understand cannabis’s mechanisms of action. The Marijuana Tax At of 1937 Federally banned the use of cannabis in the US for either medical or recreational uses, and it restricted scientific studies of...

Read more

How Regulations Shape the Cannabis Industry

16-05-2020 - Hits:2723 - Ruth Fisher - avatar Ruth Fisher

  The cannabis industry is highly regulated, and the various regulations play a powerful role in shaping the structure, and thus outcome, of the industry. This analysis examines the following questions: How do cannabis market regulations shape market structure? Are the resulting outcomes favorable to suppliers and/or consumers? What are the pros and cons...

Read more

Cannabis Industry Rollouts: Lessons Learned from States’ Experiences

27-04-2020 - Hits:1944 - Ruth Fisher - avatar Ruth Fisher

Bart Schaneman from MJ Business Daily recently released, “2020 Cultivation Snapshot: U.S. Wholesale Marijuana Prices & Supply.” The information contained in the report helped cement certain insights I’ve had about the evolution of the cannabis market. Background info In addition to the myriad other laws and regulations, all states essentially have two...

Read more

A Data-Generating System: A Framework for Data Assessment

14-04-2020 - Hits:1215 - Ruth Fisher - avatar Ruth Fisher

Suppose I gave you, the Data Analyst, a dataset of information on sales of Ford automobiles, and suppose I told you to use that dataset to predict total national sales of Ford automobiles for next 12 months. What would you want to know about the data you were given? If you...

Read more

Hemp and CBD Market Supply

06-04-2020 - Hits:2279 - Ruth Fisher - avatar Ruth Fisher

The information in this post was compiled in an attempt to understand 2 issues: Does the cultivation of hemp differ depending on the hemp product supplied (fiber, seed, or flower)? Is the CBD produced from hemp (cannabis with ≤ 0.3% THC) identical to the CBD produced from marijuana (cannabis with > 0.3%...

Read more

Trends in Cannabis Patents Over Time

08-12-2019 - Hits:2505 - Ruth Fisher - avatar Ruth Fisher

Patent Counts by Year I searched the USPTO patent database for all patents for which the patent abstract contained any of the following terms: cannabis, cannabinoid, marijuana, tetrahydrocannabinoid, or cannabinol. My search yielded 914 patents. As seen in Figure 1, there were only a handful of cannabis patents each year until the...

Read more