December, 2005

Uncertainty, Human Action, and Scenarios: An Austrian Theory Based Decision Support Tool for Business Strategy and Public Policy

  • Paul Dragos Aligica

    Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics
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The "scenario method", "scenario building" or "multiple futures analysis" emerged during the last decades as a premier instrument for strategic planning and decision making in conditions of uncertainty. This working article demonstrates that there is an intrinsic link between Austrian theory and scenarios not only at the level of basic epistemological principles but also at the methodological and applied levels. The article also argues that the scenario method could easily be embraced as a part of the Austrian family of ideas and more precisely as one of the key policy applications or decision support tools informed by that school of thought. Blending explicitly and systematically the scenario method with the Austrian ideas and forcefully making the case for the scenario approach as a policy and business administration tool, is thus one of the most effective ways of reasserting the importance of Austrian insights in areas such as business studies, public policy and organizational theory, areas that currently have a limited exposure to Austrian ideas.