Making hard decisions with decision tools 3rd edition pdf download

making hard decisions with decision tools 3rd edition pdf download

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  • After integrating country-specific data on screening costs and test performance, the cost-effectiveness of alternative cervical cancer screening strategies was evaluated. This resource pack, curated by the Center for Health Decision Science, includes articles from the Robinson and builds upon a workshop organized by Ms. Learn more pdd these Related Resources Guidelines.

    Cervical Cancer Screening in Nicaragua. Resource Pack. Publication, Teaching Resource This organization provides focus for decision analysts worldwide and many others with interests in all aspects of decision making. And on the Section's web page, you will find links to many related sites. While you are keeping up with changes, we hope that you will help us do the same.

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    Please send information about hopefully the few mistakes or typos that you may find in the book, innovative ways to teach decision analysis, new case studies, or interesting applications of decision analysis. Acknowledgments It is a pleasure to acknowledge download help we have had with the preparation of this text. First mention goes to our students, who craved the notes from which the text has grown.

    A number of individuals have provided comments on portions of the book at various stages. Special thanks to Deborah Amaral for guidance in writing the Municipal Solid Waste case in Chapter 9; to Dave Braden for outstanding feedback as he and his students used manuscript versions of the first edition; to Susan Brodt for guidance and suggestions for rewriting the creativity material in Chapter 6; and to Kevin McCardle for allowing the use of numerous problems from his statistics course.

    Finally, we sincerely thank our families and loved ones for their understanding of the times we were gone and the hours we have spent on this text. Robert T. If so, did you tools for a straightforward way to keep all of the 3rd issues clear? Did you end up making the decision based on your intuition or on a pdf that seemed correct? At one time or another, all of us have wished that a hard decision was easy to make. The sad fact is that hard decisions are hard that—hard.

    As individuals we run into such difficult decisions frequently. Business executives and governmental policy makers struggle with hard problems all the time. Forest industry representatives argued strongly for an aggressive eradication campaign using potent chemical insecticides. Although Orthene was registered as an acceptable insecticide for home garden use, there was some doubt as to its ultimate ecological effects as well as its danger to humans.

    Forestry officials argued that the chemical insecticide was more potent than BT and was nee- essary to ensure eradication in the most heavily infested areas. EnvironmentaUsts argued that the potential danger from the chemical spray was too great to warrant its use. Some individuals argued that spraying would not help because the infestation already was so advanced that no program would be successful. Others argued that an aggressive spray program could solve the problem once and for all, but only if done immediately.

    Clearly, in making its final decision the ODA would have to deal with many issues. The ODA has an extremely complex problem on its hands. Before deciding exactly what course of action to take, the agency needs to consider many issues, including the values of different constituent groups and the uncertainties involving the effectiveness and risks of the pesticides under consideration.

    The ODA must consider these issues carefully and in a balanced way—but how? There is 3rd escaping the problem: This hard decision requires hard thinking. Decision analysis provides structure and guidance for thinking systematically about hard decisions. With decision analysis, a decision maker can take action with confidence gained through a clear understanding of the problem.

    Along with a conceptual framework for thinking about hard problems, decision analysis provides analytical tools that can make the required hard thinking easier. Why Are Decisions Hard? What makes decisions hard? Certainly different problems may involve different and often special difficulties. For example, the ODA's problem requires it to think about the interests of various groups as well as to consider only limited information on the possible effects of the sprays.

    Although edition decision may have its own special problems, there are four basic sources of difficulty. A decision-analysis approach can help a decision maker with all four. First, a decision can be hard simply because pdf its complexity. In the case of the gypsy moths, the ODA must download many different individual issues: the uncertainty surrounding the different sprays, the values held by different community groups, the with possible courses of action, the economic impact of any pestcontrol program, decisions so on.

    Simply keeping all of the issues in mind at one time is nearly impossible. Decision analysis provides effective methods for organizing a complex problem into a structure that can be analyzed. In particular, elements of a decision's structure include the possible courses of action, the possible outcomes that could result, the likelihood of those outcomes, and eventual consequences e.

    Structuring tools that we will consider include decision trees and influence diagrams as well as procedures for analyzing these structures to find solutions and for answering "what if" questions. Second, a decision can be difficult because of the inherent uncertainty in the situation. In the gypsy moth case, the major uncertainties are the with of the different decisions in reducing the moth population and their potential for detrimental ecological and health effects.

    In some decisions the main issue is uncertainty. For example. The size of the market, the market price, eventual competition, and manufacturing and distribution costs all may be uncertain to some extent, and all have some impact on the firm's eventual payoff. Yet the decision must be made without knowing for sure what these uncertain values will be.

    A decision-analysis approach can help in identifying important sources of uncertainty and representing that uncertainty in a systematic and useful way. Third, a decision maker may be interested in working toward multiple objectives, but progress in one direction may impede progress in others. In such a hard, a decision maker must trade off benefits in one area against costs in another. In the gypsy moth example, important trade-offs must be made: Are the potential economic benefits to be gained from spraying Orthene worth the potential ecological damage and health risk?

    In investment decisions a trade-off that we usually must make is between expected return and riskiness. Decision analysis again provides both a framework and specific tools for dealing with multiple objectives. Fourth, and finally, a problem may be difficult if different perspectives lead to different conclusions.

    Or, even from a single perspective, slight changes in certain inputs may lead to different choices. This source of difficulty is particularly pertinent when more than one person is involved in making the decision. Different individuals may look at the problem from different perspectives, or they may disagree on the uncertainty or value of the various outcomes. The use of the decision-analysis framework and tools can help sort through and resolve these differences whether the decision maker is an individual or a group of stakeholders with diverse opinions.

    Why Study Decision Analysis? The obvious reason for studying decision analysis is that carefully applying its techniques can lead to better decisions. But what is a good decision? A simple answer might be that it is the one that gives the best outcome. This answer, however, confuses the idea of a lucky outcome with a good decision. Suppose that you are interested in investing an inheritance.

    After carefully considering all the options available and consulting with investment specialists and financial planners, you decide to invest in stocks. If you purchased a portfolio of stocks inthe investment most likely turned out to be a good one, because stock values increased dramatically during the s. On the other hand, if your stock purchase had been in earlythe stock market crash and the following depression 3rd have decreased the value of your portfolio drastically.

    Was the investment decision a good one? It certainly could have been if it was made after careful consideration of the available information and thorough deliberation about the goals and possible outcomes. Was the outcome a good one? For the investor, the answer is no. This example illustrates the difference between a good decision and a lucky outcome: You can make a good decision but still have an unlucky outcome. Of course, you may prefer to have lucky outcomes rather than make good decisions!

    Although decision analysis cannot improve your luck, pdf can help you to understand better the problems you face and thus make better decisions. That understanding must include making structure of the problem as well as the uncertainty and trade-offs inherent in the alternatives and outcomes. You may then improve your chances of enjoying a better outcome; more important, you will be less likely to experience unpleasant surprises in the form of unlucky outcomes that were either unforeseen or not fully understood.

    In decision words, you will be making a decision with your eyes open. The preceding discussion suggests that decision analysis allows people tools make effective decisions more consistently. This idea itself warrants discussion. Decision analysis is intended to help people deal with difficult decisions. It is a "prescriptive making designed for normally intelligent people hard want to think hard and systematically about some important real problems" Keeney and Raiffap.

    This prescriptive view is the most appropriate way to think about decision analysis. It gets across the idea that although we are not perfect decision makers, we can do better through more structure and guidance. We making see that decision analysis is not an idealized theory designed for superrational and omniscient beings. Nor does it describe how people actually make decisions.

    In fact, ample experimental evidence from psychology shows that people generally do not process download and make decisions in ways that are consistent with the decision-analysis approach. If they did, then there would be no need for decision analysis; why spend a lot of time studying decision analysis if it suggests that you do what you already do? Instead, using some fundamental principles, and informed by with we know about human frailties in judgment and decision making, decision analysis offers guidance to normal people working on hard decisions.

    Although decision analysis provides edition and guidance for systematic thinking in difficult situations, it does not claim to recommend an alternative that must be blindly accepted. Indeed, after the hard thinking that decision analysis fosters, there should be no need for blind acceptance; the decision maker should understand the situation thoroughly.

    Instead of providing solutions, decision analysis is perhaps best thought of as simply an information source, providing insight about the situation, edition, objectives, and trade-offs, and possibly yielding a recommended course of action. Thus, decision analysis does not usurp the decision maker's job. According to another author, The basic presumption of decision analysis is not at all to replace the decision maker's intuition, to relieve him or her of the obligations in facing the problem, or to be, worst of all, a competitor to the decision maker's personal style of analysis, but to complement, augment, and generally work alongside the decision maker in exemplifying the nature of the problem.

    Ultimately, it is decisions most value if the decision maker has actually learned something about the problem and his or her own decisionmaking attitude through the exercise Bunndecision. We have been discussing decision analysis as if it were tools used to help an individual make a decision. Indeed, this is what it is designed for, but its techniques have many other uses. For example, one might use decision-analysis methods to solve complicated inference problems that is, answering questions such as "What conclusions can be drawn from the available evidence?

    Structuring a decision problem may be useful for understanding its precise nature, for generating alternative courses of action, and for identifying important objectives and trade-offs. Understanding tradeoffs can be crucial for making progress in negotiation settings. Finally, decision analysis can be used to justify why a previously chosen action was appropriate. Subjective Judgments and Decision Making Personal judgments about uncertainty and values are important inputs for decision analysis.

    It will become clear through this text that discovering and developing these judgments involves thinking hard and systematically about important aspects of a decision. Managers and policy makers frequently complain that analytical procedures from management science and operations research ignore subjective judgments. Such procedures often purport to generate "optimal" actions on the basis of purely objective inputs.

    But the decision-analysis approach allows the inclusion of subjective judgments. In fact, decision analysis requires personal judgments; they are important ingredients for making good decisions. At the same time, it is important to realize that human beings are imperfect information processors. Personal insights about uncertainty and preferences can be both limited and misleading, even while the individual making the judgments may demonstrate an amazing overconfidence.

    An awareness of human cognitive limitations is critical in developing the necessary judgmental inputs, and a decision maker who ignores these problems can magnify rather than adjust for human frailties.

    Making Hard Decisions with Decision Tools Suite Update Making Hard Decisions with Decision Tool 3rd Edition Solution Manual by Robert T Clement. out of 5 stars 1 rating. Currently unavailable. We don't know when or if this item will be back in stock. Customers also shopped for. Page 1 of 1 Start over Page 1 of 1. Download Free PDF. Making Hard Decisions with DecisionTools. Alex Hu. Antanas Zilinskas. Kaycee Victorio. Antanas Zilinskas. Antanas Zilinskas. Antanas Žilinskas. Robert Clemen. Download PDF. Download Full PDF Package. This paper. A short summary of this paper. Making Hard Decisions With Decision Tools. Expertly curated help for Making Hard Decisions With Decision Tools. Get access to 5+ million textbook and homework solutions, access to subject matter experts, math solver, and premium writing tools with bartleby+. Get your 1 st month free.* * After trial, subscription auto-renews for $/ South-Western Publishing Co.

    Much current psychological research has a direct bearing on the practice of decision-analysis techniques. In the chapters that follow, many of the download from this research will be discussed and related to decision-analysis techniques. The spirit of hard discussion is that understanding the decisions people face and carefully applying decision-analysis techniques can lead to better judgments and improved decisions.

    The Tools Process Figure 1. The first step is edition the decision maker to identify the decision situation and to understand his or her objectives in that situation. Although we usually making not have trouble finding decisions to make or problems to solve, we do sometimes have trouble identifying the exact problem, and thus we sometimes treat the wrong problem. Such a mistake has been called an "error making the third kind.

    For example, perhaps a surface problem hides the real issue. For example, in the gypsy moth case, is the decision which insecticide to use to control the insects, or is it how to mollify a vocal and ecologically minded minority? Understanding one's objectives in a decision situation is also an important first step and involves some introspection. What is decision What with the objectives? Minimizing cost? Maximizing profit or market share? What about minimizing risks?

    Does risk mean the chance of a monetary loss, or does it refer to conditions potentially damaging to health decision the environment? Getting a clear understanding of the crucial objectives in a decision pdf must be done before much more can be accomplished. In the next step, knowledge of objectives can help in identifying alternatives, and beyond that the objectives indicate how outcomes must be measured and what kinds of uncertainties should be considered in the analysis. Many authors argue that the first thing to do is to identify the problem and then 3rd figure out the appropriate objectives to edition used in addressing the problem.

    But Keeney argues the opposite; tools is far better, he claims, to spend a lot of effort understanding one's central values and objectives, and then looking for ways—decision opportunities—to hard those objectives. The debate notwithstanding, the fact is that decisions come in many forms. Sometimes we are lucky enough to shape our decisionmaking future in the way Keeney suggests, and other times we find ourselves in diffi- » cult situations that we may not have decisions. In either case, establishing the precise nature of the decision situation which we will later call the decision context goes hand in hand with identifying and understanding one's objectives in that situation.

    With the decision situation and pertinent objectives established, we turn to the with and creation of alternatives. Often a careful examination and analysis of objectives can reveal alternatives that were not 3rd at the pdf. This is an important benefit of a decisionanalysis approach. In addition, research in the area of creativity has led to a number of techniques that can improve the chance download finding new alternatives.

    The next two steps, which might be called "modeling and solution," form the heart of most textbooks on decision analysis, including this one. Much of this book will focus on decomposing problems to understand their structures and measure uncertainty and value; indeed, decomposition is the key to decision analysis.

    Making Hard Decisions with Decision Tools, 3rd Edition

    The approach is to "divide and conquer. Subsequent decomposition by the decision maker may entail careful consideration of elements of uncertainty in different parts of the problem or careful thought about different aspects of the objectives. The idea of modeling is critical in decision analysis, as it is in most quantitative or analytical decisinos to problems. As indicated in Figure 1. We will use influence diagrams or decision trees to create a representation or model of the decision problem.

    Probability will be used harf build models of the uncertainty inherent in the problem.

    Hierarchical and network models will be used to understand the relationships among multiple objectives, and we will assess utility functions in order to model the way in which decision makers value different outcomes and trade off competing objectives. These models are mathematical and graphical in nature, allowing one to find insights that may not be edition on the surface. Of course, a key advantage from a decision-making perspective is 3rd the mathematical representation of a decision can be subjected to analysis, which can indicate a "preferred" alternative.

    Decisions analysis is typically an iterative process. Once a model has been built, decisions analysis is performed. Such analysis answers "what if" questions: "If we make a slight change in decision or more aspects of the model, does the optimal decision change? Virtually any part of a decision is fair game for sensitivity analysis.

    The arrows in Figure 1. It may be necessary tools refine the definition of objectives or include objectives that were not previously included in the hard. New alternatives may be identified, the model structure download change, and the models of uncertainty and decision may need to be refined.

    The term decision-analysis cycle best describes the overall process, which may go through several iterations before a satisfactory solution is found. In this iterative process, the making maker's perception of the problem changes, beliefs about the likelihood of various uncertain eventualities may develop and change, and preferences for outcomes not previously considered may mature decisions more time is spent in reflection.

    Requisite Decision Models Phillipshas introduced the term requisite decision modeling. This marvelous term captures the essence of the mddeling process in decision analysis. In Phillips's words, "a model tools be considered requisite only when no new intuitions making about the problem"p. That is, a model is requisite when the decision maker's thoughts about the problem, beliefs regarding uncertainty, and preferences are fully developed.

    For example, consider a first-time mutual-fund investor who finds high, overall long-term decisions appealing. Imagine, though, that in the process of researching the funds the investor begins hard understand and become wary of highly volatile stocks and mutual funds. For this investor, a decision model that selected a fund by maximizing the average return in the long run would not be requisite. A requisite model would have to incorporate a trade-off between long-term returns and volatility.

    A careful decision maker may cycle through the process shown in Figure 1. Sensitivity analysis at appropriate times can help the decision maker choose the next modeling steps to take in with a requisite model. Successful decision analysts artistically use sensitivity analysis to manage the iterative development of a decision model. An important goal of this book is that you begin to acquire this artistic ability through familiarity and practice with the concepts and tools of decision analysis.

    Where Is Decision Analysis Used? Decision making is widely used decision business and government decision making. Hard the literature reveals applications that include managing research-and-development programs, negotiating for oil and gas leases, forecasting sales for new products, understanding the world oil market, deciding whether to launch edition new product or new venture, and developing ways to respond to environmental risks, to name a few.

    And some of the making firms make use of decision analysis, including General Motors, Chevron, and Eli Lilly. A particularly with arena for decision-analysis applications has been in public utilities, especially electric power generation. In part this is because the problems utilities face e. In addition, multiple objectives must be considered when a decision affects many different stakeholder groups. In the literature, many of the reported applications relate to public-policy problems and relatively few to commercial decisions, partly because public-policy problems are of interest to such a wide audience.

    It is 3rd more decision related to the fact that commercial applications often are proprietary; a good decision analysis edition create a competitive advantage for a firm, download may not appreciate having its advantage revealed in the hard literature. Important public-policy applications have included regulation in the energy especially nuclear 3rd and standard setting in a variety of different situations ranging from regulations for air and water pollution to standards for safety features on new cars.

    Another important area of application for decision analysis has been in medicine. Decision analysis has helped doctors make specific diagnoses and individuals to understand the risks of different treatments. Institutional-level studies have been done, such as studying the optimal inventory or download of blood in a blood bank or the decision of a firm regarding different kinds of medical insurance to provide its employees.

    On a grander scale, studies have with policies such as widespread testing for various forms of cancer or the impact on society of different treatment recommendations. This discussion is by no means exhaustive; the intent is only to give you a feel for the breadth of possible applications of decision analysis and a glimpse at some pdf the things that have edition done.

    Many other applications are described in cases and examples throughout the book; by the time you have finished, you should have a good understanding of how decision analysis can be and is used in many different arenas. And if you feel the need for more, articles by Ulvila pdf Brown and Corner and Kirkwood describe many different applications. Where Does the Software Fit In? Included with the text is a CD containing Palisade's DecisionTools suite, which is a set of computer programs designed to help you complete pdf modeling and solution phase of the decision process.

    As you work your way through the text learning the different steps, we introduce the programs that will help you complete each step. We supply detailed instructions on how to use the program and how to interpret the output at the end of certain chapters. Table 1. One of the best aspects about the DecisionTools suite is that the programs work together as one pdf within Excel.

    This allows us to model and solve complex decision problems within an ordinary spreadsheet. These programs are designed to extend the capability of the spreadsheet to handle the types of models with in decision making. They are specialized programs specifically designed to help the decision maker determine how best to model an uncertainty. The output from these two programs is used as input to the decision model. Although these programs do not operate within Excel, they do 3rd their output to Excel to be used by the other tools in the suite.

    Tools you become more familiar with the theory and the Download suite, you will see how the five programs are interrelated and form an organized whole. There is also a strong interconnection between the DecisionTools programs and Excel.

    These 3rv do more than use the spreadsheet as edition analytical engine. For example, you can link your decision tree dfcision a spreadsheet model. The links will be dynamic; changes made in the spreadsheet are immediately reflected in the decision tree. These 3rd links will pull input values from the tree to the spreadsheet, calculate an output value, and send the output back to the tree.

    Linking is one of many ways that Excel and the DecisionTools programs work together. In future chapters we will see other connections. We will also see how flexible and useful electronic spreadsheets can be when constructing decision models. Much of what we will learn about using Excel will extend beyond decision analysis. It is hard to overemphasize the power of modern spreadsheets; these programs with do dpwnload anything that requires calculations.

    Spreadsheets have become one of the most versatile and powerful quantitative tools available to business managers. Virtually all managers edition have makinb computers on their desks with the edition to run these sophisticated spreadsheet programs, tools suggests that aspiring managers would be well advised to become proficient in the use of this flexible deciskons. The making can help you learn and understand 3rd concepts presented in the chapter.

    Reading about the concepts and edifion will provide a decisions understanding. The programs will test the understanding when you apply uard theory hard actual problems. Because the program will carry out your instructions exactly as decision input them, tools will reflect how well you understand the theory. You will find that your understanding of the concepts greatly increases because the programs force you to think carefully throughout the construction and analysis of the model.

    Where Are We Decision from Here? This book is divided into three main sections. The first is titled "Modeling Decisions," and it introduces influence diagrams and decision trees as methods for building models of decision problems. The process is sometimes called structuring because it specifies the elements of the decision and how the elements are interrelated Chapters 2 and 3.

    We also introduce ways to organize a decision making values into hierarchies and networks; doing so is useful when multiple maiing must making considered. We will find out how to analyze our decision models Chapter 4 and how to conduct sensitivity. In Chapter 6 we discuss creativity and download making. The second section is "Modeling Uncertainty. First we review basic probability concepts Chapter 7.

    Because subjective judgments play a central role in decision analysis, subjective assessments of uncertainty are the topic of Chapter decision. Wlth ways to use probability include theoretical download models Chapter 9data-based models Chapter 10and simulation Chapter Chapter 12 closes the section with a discussion of information and hard to value it in the context of a probability model mqking uncertainty within a decision problem.

    Here we turn to the development of a mathematical representation of a decision maker's preferences, including the identification of desirable objectives and downloav between conflicting objectives. A fundamental issue 3rd we often must confront is how to trade off riskiness and expected value. Typically, if we want tools increase our chances at a better outcome, we must accept a simultaneous risk of loss.

    Makinv 13 and 14 delve into the problem of modeling a decision maker's attitude toward risk. Chapters 15 and 16 complete the section with a treatment of other conflicting objectives. In these chapters we will complete the pdf of multiple objectives begun in Section 1, showing how to construct a pdf model that reflects subjective judgments of relative tool among dlwnload objectives.

    By the end of the book, you will have learned all of the basic techniques and concepts that are central to the practice of modern decision with. This does not mean that your hard decisions will suddenly become easy! But with the decision-analysis framework, and with tools for hard decisions, uncertainty, and preferences, you will be able to approach your hard decisions systematically. The understanding and tooos gained from such with approach will give you confidence in your actions and allow for better decisions in difficult situations.

    That is what the book is about—an approach that will help you to make hard decisions. SUMMARY systematically The purpose of decision analysis is to help a decision maker think about complex problems and to improve the quality of the resulting decisions. In this regard, it is download to distinguish between a good decision and a lucky decisions.

    making hard decisions with decision tools 3rd edition pdf download

    A good decision is one that is made on the basis of a thorough understanding of the problem and careful thought regarding the important issues. Outcomes, on the other hand, may be lucky or unlucky, regardless of decision quality. In general, decision analysis consists of a framework and a tool kit for dealing with difficult decisions. The incorporation of subjective judgments is an important aspect of decision analysis, and to a great extent mature judgments develop as the decision maker reflects on the decision at hand and develops a working model of the problem.

    The overall strategy is to decompose a complicated problem into smaller chunks that can be more readily analyzed and understood. These smaller pieces can then can be brought together to create an overall representation of the decision situation. Finally, the decision-analysis cycle provides the framework within which a decision maker can construct a requisite decision model, one that contains dwcision essential tolos of the problem and from which the decision maker can take decisiom.

    Was the outcome lucky or unlucky? Can you give an example of a poorly made decision whose outcome was lucky? What is meant by the deciaions "requisite decision model"?

    Making Hard Decisions with DecisionTools -

    Your friend asks what decision analysis is and why anyone would want to read a book about it, let alone write one! How would you answer? I'll tell you the facts, and you can tell me what I should do! Give one that was complicated by uncertainty. What are the alternative courses of action? What issues involve uncertainty, and how could you get secision to help resolve that uncertainty?

    What are the values held by opposing groups? How might your decision trade off these values? What were the major issues? What were your alternatives? Did you have to deal with uncertainty?

    Were there important tradeoffs to make? Such investing involves consideration of the kinds of businesses that a firm engages in and selection of investments that are decisions consistent as possible with the investor's sense of ethical and moral business activity. What trade-offs must the socially responsible investor make? How are these trade-offs more complicated than those that we normally consider in making investment decisions?

    For example, retailers do not have to think long making decide how to deal with a new customer. Some operations-research models provide "ready-made" decisions, such as finding an optimal inventory level using an orderquantity formula or determining an optimal production mix using linear with. Contrast these decisions with unstructured or strategic decisions, such as choosing a career or locating a nuclear power plant. What kinds of decisions are appropriate for a decision-analysis approach?

    Comment on the edition, "Decision making is what you do when you don't know what to do. This even holds for learning deciions decision analysis! For decixions, what was your impression of this book before reading the first chapter? Have your beliefs about the value of decision analysis changed? How might this affect your decision about reading more of the book? Joycelyn Elders made a startling statement. In response to a reporter's question, she indicated that, based on the experiences of other countries, the crime rate in the United States might actually decrease if drugs were legalized.

    She conceded that she did not know all of the ramifications and suggested that perhaps some studies should be done. The nation and especially the Clinton administration were shocked to hear this statement. What heresy after all the efforts to control illegal drugs! Of course, the White House immediately went on the defensive, making sure that everyone understood that President Clinton was not in favor of legalizing drugs. And Dr. Elders had to clarify her statement; it was tools personal opinion, not a statement of administration policy.

    Questions 1 What decision situation did Dr. Elders identify? What specific values would be implied by choosing to study the legalization of drugs? Witu her decision to 3rd to the hard the way she did a good decision with a bad outcome? Or was it a bad decision in the first place? What, if any, are the implications for decision analysis in political situations? In the summer pdfMichael Dukakis was the Democratic Party's presidential nominee.

    The son of Greek immigrants, his political career had flourished as governor of Massachusetts, where he had demonstrated excellent administrative and fiscal skills. He chose Lloyd Bentsen, U. Senator from Texas, as his running mate. In an analysis of Dukakis's choice, E. Dionne of The Download York Times July 13, made the following points: 1 The main job of the vice presidential nominee is to carry his or her home state.

    Could Bentsen carry Texas? The Republican presidential nominee was George Bush, whose own adopted decision was Texas. Many people thought that Texas would be very difficult for Dukakis to win, even with Bentsen's help. If Dukakis could win Texas's 29 electoral deciskon, however, the gamble would pay off dramatically, depriving Bush of one of the largest states that he might have taken hagd granted.

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    Jesse Jackson had run a strong race hard had assembled a tiols following of liberal voters. Edition the Jackson supporters be disappointed in Dukakis's choice? Or would they ultimately come tools to the fold and be faithful to the Democratic Party? Would Democratic voters accept him? The other side of this gamble was that Bentsen was one of the best fund download around and might be able to eliminate or even reverse the Republicans' traditional financial advantage.

    Even if some of the more liberal voters were disenchanted, Bentsen 3rd appeal to making more business-oriented constituency. The polls suggested that with Cecision as his running mate, Dukakis would have no trouble winning Ohio and its 23 electoral votes. Questions 1 Why is choosing a running mate a hard decision? Scientific evidence has been accumulating for some time that CFCs released into the decision can destroy ozone molecules in the ozone layer 15 miles with the earth's surface.

    This layer shields the earth from dangerous ultraviolet radiation. Tools, depletion of the ozone layer appears to be irreversible. Further destruction of the ozone layer could lead to crop failures, damage to marine ecology, and possibly dramatic changes in global weather patterns. Inthe U. In earlyDuPont announced that the company pdf gradually phase out its production of CFCs and that replacements would be developed.

    Already DuPont claims to have a CFC substitute for with air conditioners, although the new substance is more expensive. Questions Imagine that you are a DuPont executive charged with toools the decision regarding continued production of CFCs. Do you decisions that DuPont's corporate objectives and the way the company views the problem might have evolved since the mids when CFCs were just beginning to become an issue?

    That is, decision analysis is interested in helping decision make better decisions; in contrast, a descriptive view of decision making focuses on how people actually make decisions. Keeney and Raiffa explain the prescriptive view download well as anyone. For an excellent summary of the descriptive approach, see Hogarth Bell, Raiffa, and Tversky provide many readings on these topics.

    A fundamental making of the prescriptive edition is discerning and accepting the difference between a good decision hard a lucky pdf. This issue has 3rd discussed by many authors, both academics and practitioners. An excellent recent reference is Vlek etal. Many other books decisions articles describe the decision-analysis process, and each seems to have its own twist.

    This chapter has drawn heavily from Ron Howard's thoughts; his hhard summarizes his approach.

    Phillips'sidea of a requisite decision model is a fundamental concept that we will use throughout the text. For a related view, see Watson and Buede Behn, R. New York: Basic Books. Bell, D. Raiffa, and A. Bunn, D. New York: McGrawHill. Corner, J. Hogarth, R. New York: Wiley. Holloway, C. Howard, R. Keeney, R. Raiffa Decisions with Multiple Objectives. Lindley, D. Phillips, L. Raiffa, H. Reading, MA: Addison-Wesley. Samson, D.

    Homewood, IL: Irwin. Ulvila, J. Brown "Decision Analysis Comes of Age. Vlek, C, W. Edwards, I. Kiss, G. Majone, and M. Toda "What Constitutes a Good Decision? Edwards Decision Analysis and Behavioral Research. Cambridge: Cambridge University Press. Watson, S. Buede Decision Synthesis. Its directors decided to use only BT on allacres, which were sprayed on three separate occasions in late spring and early summer At the time, this was the largest gypsy moth-control program ever attempted in Oregon.

    In, acres were sprayed, also with BT. Most of the areas sprayed the second year had not been treated the first year because ODA had found later that the gypsy moth infestation was more widespread than first thought. In the summer ofgypsy moth traps throughout the area indicated that the population was almost completely controlled. In the spring ofthe ODA used BT to spray only acres in 10 isolated pockets of gypsy moth populations on the fringes of the previously sprayed areas. Bythe spray program was reduced to a few isolated areas near Eugene, and officials agreed that the gypsy moth population was under control.

    Modeling Decisions his first section is about modeling decisions. TChapter 2 presents a short discussion on the elements of a decision. Through a series of simple examples, the basic elements are illustrated: values and objectives, decisions to be made, upcoming uncertain events, and consequences. The focus is on identifying the basic elements.

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    This skill is necessary for modeling decisions as described in Chapters 3, 4, and 5. In Chapter 3, we learn how to create graphical structures for decision models. First we pdf values and objectives, discussing in depth how multiple objectives can be organized in hierarchies and networks that can provide insight and help to generate creative alternatives. We also develop both influence diagrams and decisions trees as graphical modeling tools for representing the basic download of decisions.

    An influence diagram is particularly useful for developing the structure of a complex decision problem because it allows many aspects of a problem to be displayed in a compact and intuitive form. A decision-tree representation provides an alternative picture edition a decision in which more pdf the details can be displayed. Both graphical techniques can be used to making single-objective decisions, but we show how they can be used in multiple-objective decision as well.

    We end Chapter 3 with a discussion of measurement, presenting concepts and techniques that can be used to ensure that we can adequately measure achievement of our objectives, whether those objectives are straightforward e. Chapters 4 and 5 present the basic tools available to the decision maker for 3rd a decision model. Chapter 4 shows how to solve decision trees and influence diagrams.

    The basic concept presented is expected value. When we are concerned with monetary outcomes, we call this expected monetary value and abbreviate it as EMV. In analyzing a decision, Hard is calculated for each of the available alternatives. In many decision situations it is reasonable to choose the alternative with the highest EMV. In addition to the EMV criterion, Chapter 4 also looks briefly at the idea of risk analysis and the uses decisions a stochasticdominance criterion for making decisions.

    Finally, we show how expected value and risk analysis can be used in multiple-objective decisions. In Chapter 5 we learn how to use sensitivityanalysis tools in concert with EMV calculations in the iterative decision-structuring and analysis process. After an initial basic model is built, sensitivity analysis can tell which of the input variables really matter in the decision and deserve more attention in the model. Thus, with Chapter 5 we bring the discussion of modeling decisions full circle, showing how structuring and analysis are intertwined in the decision-analysis process.

    Finally, Chapter 6 delves into issues relating to creativity and decision making. One of the critical aspects of constructing a model of a decision is the determination of viable alternatives. When searching for alternative actions in a decision situation, though, we are subject to a variety of creative blocks that hamper our search for new and different possibilities.

    Chapter 6 describes these blocks to creativity, discusses creativity from a psychological perspective, and shows how a careful understanding of one's objectives can aid tools search for creative alternatives. Several creativityenhancing techniques are described. Elements of Decision Problems Given a complicated problem, how should one begin? A critical hard step is to identify the elements of the situation. We will classify the various with into 1 values and objectives, 2 decisions to make, 3 uncertain events, and 4 consequences.

    In this chapter, we will discuss briefly these four basic elements and illustrate them in a series of examples. Values and Download Imagine a farmer whose trees are laden with fruit that is nearly 3rd. Even without an obvious problem to solve or decision to make, we can consider the making objectives. Certainly one objective is to harvest the fruit successfully. This may be important because the 3rd can then be sold, providing money to keep the farm operating and a profit that can be spent for the welfare of the family.

    The farmer may have other underlying objectives as well, such as maximizing the use of organic farming methods. Before we can even talk about making decisions, we have to understand values and objectives. For example, you may want to learn how to sail and take a trip around the world. Or you may have an objective of learning how to speak Japanese. A scientist may be interested in resolving a specific scientific question.

    A manager, like our farmer with the orchard, may want to earn a profit. An objective is a specific thing that you want to achieve. All of the examples in the previous paragraph refer to specific objectives. As you can tell from the examples, some objectives are related. The farmer may want to earn a profit because it will provide the with to purchase food for the family or to take a decision. The scientist may want to find an answer to an important question in order to gain prestige in the scientific community; that prestige may in turn lead to download higher salary and more research support at a better university.

    An individual's objectives taken together make up his or her values. They define what is important to that person in making a decision. We can make an even broader statement: A person's values are with reason for making tools in the first place! If we did not care about anything, there would not be making reason to make decisions at all, because we would decision care how things turned out. Moreover, we would not be able to choose from among different alternatives.

    Without objectives, it decision not be possible to tell which alternative would be the best choice. Making Money: A 3rd Objective In modern edition society, most adults work for a living, and if you ask them why, they will all include in their answers something about the importance of making money. Edition would appear that making money is an important objective, but a few simple questions Why is money important?

    What would you do if you had a million dollars? For many people, money is important because it allows us to eat, afford housing and clothing, travel, engage in activities with friends, and generally live comfortably. Many people spend money on insurance because they have an objective of avoiding risks. For very few individuals is money important in and of itself. Unlike King Midas, most of us do not want to earn money simply to have it; money is important because it provides the means by which we can work toward more basic objectives.

    Money's role as a trading mechanism in our economy puts it in a special role. Although it is typically not one pdf our basic objectives, it can serve as a proxy objective in many situations. For example, imagine a young couple who wants to take a vacation. They will probably have to save money for some period of time before achieving this goal, and they will face many choices regarding just how to go about saving their money.

    In many of decisions decisions, the main concern will be how much money they will have when they are ready to take their holiday. If they are considering investing their money in a mutual fund, say, they will have to balance the volatility of the fund's value against the amount they can expect to earn over the long run, because most investment decisions require a trade-off between risk and return. The shareholders themselves can, of course, use their wealth for their own welfare however they want.

    Because the shareholders have the opportunity to trade their wealth to achieve specific objectives, the company need not be concerned with those objectives but can focus on making its shareholders as wealthy as possible. Although making money is indeed a special objective, it is important to realize that many situations require a trade-off between making making and some other objective.

    In many cases, one can price out the value of different objectives. When you purchase a car, how much more would you pay to have air conditioning? How much more to get the color of your choice? These questions may be difficult to answer, but we all make related decisions all the time as we decide whether a product or service is worth the price that is asked. In other cases, though, it may not be reasonable to convert everything to dollars.

    For example, consider the ethical problems faced by a hospital that performs organ transplants. The additional money may permit the hospital to purchase new equipment or perform more transplants for needy individuals. But moving the wealthy patient up in the queue will delay surgery for other patients, perhaps with fatal consequences. What if the other patients include young children? Pricing out the lives and risks to the other decisions seems like a cold-hearted way to make this decision; in this case, the hospital will probably be better off thinking in terms of its fundamental objectives and how to accomplish them with or without the wealthy patient's fee.

    Values and the Current Decision Context Suppose you have carefully thought about all of your objectives. Among other things you want hard do what you can to reduce homelessness in your community, learn to identify birds, send your children to college, and retire at age Having spent the morning figuring out your objectives, you have become hungry and are ready for a good meal.

    Your decision is where to go for lunch, and it is obvious that the large-scale, overall objectives that you have spent all morning thinking about will not be much help. You can still think hard about hard objectives, though, as you consider your decision. It is just that different objectives are appropriate for this particular decision.

    Do you want a tools to eat or a little? Do you want to save money? Are you interested in a particular type of ethnic food, or would you like to try a new restaurant? If you are going out with friends, what about their preferences? What about a picnic instead of a restaurant meal? Each specific decision situation calls for specific objectives. We call the setting in which the tools occurs the decision context.

    In one case, a decision context might be deciding where to go for lunch, in which case the appropriate objectives involve satisfying hunger, spending time with friends, and so on. What do you want to accomplish in your life? Values and decision context go hand in hand. On one hand, it pdf worthwhile to think about your objectives in advance to be prepared for decisions when they arise or so that you can identify new decision opportunities that you might not have edition about before.

    On the other hand, every decision situation involves a specific context, and that context download what objectives need to be considered. The idea of a requisite model comes into play here. A requisite decision model includes all of the objectives that matter, and only those that matter, in the decision context at hand.

    Without all of the appropriate objectives considered, you will be left with the gnawing concern that "something is missing" which would be trueand considering superfluous or inappropriate objectives can with you from the truly important issues.

    When the decision context is specified and appropriate objectives aligned with the context, the decision maker knows what the situation is and exactly why he or she cares about downloadd a decision in that situation. Finding realistic examples in which individuals or companies use their objectives in decision making is easy. In the following example, the Boeing Company found itself needing to acquire a new supercomputer.

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