Decision Analysis: Practice and Promise

Abstract

Decision analysis stands on a foundation of hundreds of years of philosophical and practical thought about uncertainty and decision-making. The accomplishments and promise of the field are impressive, yet it has not become commonplace even in very important decisions. While human nature may pose an ultimate limitation, maintaining clarity of concept and exploiting progress in the realms of scope, skill, and efficiency should lead to more widespread use. A central conceptual distinction is that between normative and descriptive views of decision-making. We discuss the importance of maintaining this distinction in the face of attempts to compromise. The procedures for formulating, eliciting, evaluating, and appraising the decision problem are all experiencing major improvements. The strategy-generation table helps in finding creative alternatives. Decision quality concepts permit us to assure both effectiveness and efficiency in analyzing decision problems. The influence diagram provides new clarity to the conversation between decision-maker and analyst, allowing representations that are both easily understandable and mathematically consistent. The clarity test makes sure we know what we are talking about regardless of what we are saying about it. Direct and indirect values illuminate preferences. Generic risk attitude considerations indicate how to relate corporate risk tolerance to the financial measures of the corporation. Spreadsheet, decision tree, and influence diagram programs speed evaluation. Intelligent decision systems realized in computers offer promise of providing the benefits of decision analysis on a broader scale than ever before. Decision analysis is now poised for a breakthrough in its usefulness to human beings.

Sensitivity Analysis of Environmental Models: A Systematic Review with Practical Workflow

“…In qualitative SA, instead, sensitivity is assessed qualitatively by visual inspection of model predictions or by specific visualization tools like, for instance, tornado plots (e.g. Howard, 1988;Powell and Baker, 1992), scatter (or dotty) plots (e.g. Beven, 1993;Kleijnen and Helton, 1999a) or representations of the posterior distributions of the input factors (e.g.…”

Extending the use of scenario planning and MCDA for the evaluation of strategic options

“…As a structuring tool, a key element of MA is checking the consistency (assessing relationships between variables; and that trends are compatible within the time frame (Van der Heijden, 1996)) of these various states in order to avoid a combinatorial explosion in the number of possible configurations. Similar ideas have been invented independently multiple times in the OR literature-for example in strategic choice approach (Friend, 1989) and in the strategy table of Howard (Howard, 1988). MA is well-suited to scenario development for formal evaluation for three reasons.…”

A qualidade das alternativas em decisões estratégicas: um estudo sobre criatividade e completude em decisões empresariais

“…Existem outras formas de classificar alternativas, que guardam certa semelhança com a árvore hierárquica, como a tabela de estratégias apresentada por Howard (1988). Uma classificação feita de forma semelhante à mencionada anteriormente, porém dirigida aos objetivos, e não às alternativas, foi apresentada por Saaty (1991).…”