Detailed scenarios: what coherence does not guarantee
Decision-making committees readily ask for precise scenarios, complete with causes and consequences. The managerial question is more demanding: how can we prevent a scenario from gaining credibility simply because it gains detail?
What the literature establishes
Amos Tversky and Daniel Kahneman (1983, Psychological Review) showed that participants can judge the conjunction of two events to be more probable than one of those events alone. Yet, given identical information, “a client withdraws their assets and transfers them to a competitor” cannot be more probable than “a client withdraws their assets”. The additional detail can make the narrative more representative of a familiar situation without making it more likely to occur.
How detail changes judgement
Amos Tversky and Derek J. Koehler (1994, Psychological Review) developed and tested a theory according to which subjective probabilities depend on how events are described, not just on the events themselves. Spelling out the possibilities contained within an event can increase the weight assigned to it compared with an overall description. This mechanism, distinct from the conjunction fallacy, reminds us that a more elaborate description is not independent evidence about an event’s frequency.
The premature conclusion
One might conclude that detailed scenarios should be abandoned. That would confuse their usefulness in preparing a response with their value in estimating a probability. A scenario can be excellent for identifying operational dependencies while remaining weak as a forecast; adding a necessary condition for its occurrence cannot increase its probability when the available information is unchanged. (our executive and employee training programmes)
What these findings do not establish
These studies rely on judgement tasks and do not directly measure decision quality in businesses in Geneva. They neither quantify the frequency of these errors in a particular committee nor establish that a consistency check alone improves economic performance. An estimate can obey the rules of probability while remaining poorly calibrated against the events actually observed.
A practical check in Genève
As part of SHR’s “Decision-making” programme, one exercise is to review the scenarios considered by a Geneva committee: asset withdrawals in private banking, mission disruption in an international organisation, delivery delays in luxury watchmaking or counterparty default in commodity trading. For each scenario assigned a probability, record the main event, a version with an additional condition, and their estimates, elicited using the same information and time horizon. Then measure the proportion of pairs in which the more detailed scenario receives a higher probability, and document any corrections or differences in definition uncovered. This check verifies a minimum level of consistency in estimates, not their predictive accuracy. To go further: explore the Decision-making training in Geneva, or browse our executive and employee training programmes in Switzerland.
In pictures: Decision-making in Geneva
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