by Robert T. Clemen
Belmont CA: Duxbury Press (1996)
Introduction to Decision Analysis | Gypsy Moths and the ODA | Why Are Decisions Hard? | Why Study Decision Analysis? | Subjective Judgments and Decision Making | The Decision-Analysis Process | Requisite Decision Models | Where Is Decision Analysis Used? | Where Are We Going from Here? | Summary | Questions and Problems | Case Studies: Dr. Joycelyn Elders and the War on Drugs | Lloyd Bentsen for Vice President? | Du Pont and Chlorofluorocarbons | References | Epilogue
Elements of Decision Problems | Values and Objectives | Making Money: A Special Objective | Values and the Current Decision Context | Boeing's Supercomputer | Decisions to Make | Sequential Decisions | Uncertain Events | Consequences | The Time Value of Money: A Special Kind of Trade-Off | Larkin Oil | Summary | Questions and Problems | Case Studies: The Value of Patience | Early Bird, Inc. | References | Epilogue
Structuring Decisions | Structuring Values | Hiring a Summer Intern | Fundamental and Means Objectives | Getting the Decision Context Right | Structuring Decisions: Influence Diagrams | Influence Diagrams and the Fundamental Objectives Hierarchy | Using Arcs to Represent Relationships | Some Basic Influence Diagrams | The Basic Risky Decision | Imperfect Information | Sequential Decisions | Intermediate Calculations | Constructing an Influence Diagram (Optional) | Toxic Chemicals and the EPA | Some Common Mistakes | Multiple Representations and Requisite Models | Structuring Decisions: Decision Trees | Decision Trees and the Objectives Hierarchy | Some Basic Decision Trees | The Basic Risky Decision | Imperfect Information | Sequential Decisions | Decision Trees and Influence Diagrams Compared | Decision Details: Defining Elements of the Decision | More Decision Details: Cash Flows and Probabilities | Defining Measurement Scales for Fundamental ObjectIves | Using Computers for Structuring Decisions | Logical Decisions | DPL (Decision Programming Language) | DATA | Summary | Exercises | Questions and Problems | Case Studies: Cold Fusion | Prescribed Fire | The SS Kuniang | References | Epilogue
Texaco Versus Pennzoil | Decision Trees and Expected Monetary Value | Solving Influence Diagrams: Overview | Solving Influence Diagrams: The Details (Optional) | Solving Influence Diagrams: An Algorithm (Optional) | Risk Profiles | Cumulative Risk Profiles | Dominance: An Alternative to EMV | Making Decisions with Multiple Objectives | The Summer Job | Analysis: One Objective at a Time | Subjective Ratings for Constructed Attribute Scales | Assessing Trade-Off Weights | Analysis: Expected Values and Risk Profiles for Two Objectives | Computer Programs for Decision Analysis | Electronic Spreadsheets | Summary | Exercises | Questions and Problems | Case Studies: GPC'S New Product Decision | Southern Electronics, Part 1 | Southern Electronics, Part 11 | Strenlar | Job Offers | SS Kuniang, Part 11 | References | Epilogue
Sensitivity Analysis | Eagle Airlines | Sensitivity Analysis: A Modeling Approach | Problem Identification and Structure | One-Way Sensitivity Analysis | Tornado Diagrams | Dominance Considerations | Two-Way Sensitivity Analysis | Sensitivity to Probabilities | Two-Way Sensitivity Analysis for Three Alternatives (Optional) | Investing in the Stock Market | Sensitivity Analysis in Action | Hear Disease in Infants | Sensitivity Analysis by Computer | Sensitivity Analysis with DPL | Sensitivity Analysis with DATA | Sensitivity Analysis: A Built-in Irony | Summary | Exercises | Questions and Problems | Case Studies: The Stars and Stripes | Dumond International, Part 1 | Strenlar, Part 11 | Facilities Investment and Expansion | Job Offers, Part 11 | References | Epilogue
Creativity and Decision Making | What Is Creativity? | Theories of Creativity | Chains of Thought | Phases of the Creative Process | Blocks to Creativity | Framing and Perceptual Blocks | The Monk and the Mountain | Making Cigars | Value-Based Blocks | Cultural and Environmental Blocks | Ping-Pong Ball in a Pipe | Organizational Issues | Value-Focused Thinking for Creating Alternatives | Fundamental Objectives | Means Objectives | Transportation of Nuclear Waste | The Decision Context | Other Creativity Techniques | Fluent and Flexible Thinking | Idea Checklists | Brainstorming | Metaphorical Thinking | Other Techniques | Creating Decision Opportunities | Summary | Questions and Problems | Case Studies: Modular Olympics | Burning Grass-Seed Fields | References | Epilogue
Probability Basics | A Little Probability Theory | Venn Diagrams | More Probability Formulas | Uncertain Quantities | Discrete Probability Distributions | Expected Value | Variance and Standard Deviation | Covariance and Correlation for Measuring Dependence (Optional) | Continuous Probability Distributions | Stochastic Dominance Revisited | Stochastic Dominance and Multiple Attributes (Optional) | Probabilities Density Functions | Expected Value, Variance, and Standard Deviation: The Continuous Case | Covariance and Correlation: The Continuous Case (Optional) | Oil Wildcatting | John Hinckley's Trial | Decision-Analysis Software and Bayes' Theorem | Summary | Exercises | Questions and Problems | Case Studies: Decision Analysis Monthly | Screening for Colorectal Cancer | AIDS | Discrimination and the Death Penalty | References | Epilogue |
Subjective Probability | Uncertainty and Public Policy | Probability: A Subjective Interpretation | Accounting for Contingent Losses | Assessing Discrete Probabilities | Assessing Continuous Probabilities | Pitfalls: Heuristics and Biases | Tom W. | Representativeness | Availability | Anchoring and Adjusting | Motivational Bias | Heuristics and Biases: Implications | Decomposition and Probability Assessment | Experts and Probability Assessment: Pulling It All Together | Climate Change at Yucca Mountain, Nevada | Coherence and the Dutch Book (Optional) | Summary | Exercises | Questions and Problems | Case Studies: Assessing Cancer Risk¥From Mouse to Man | Breast Implants | The Space Shuttle Challenger | References | Epilogue
Theoretical Probability Models | Theoretical Models Applied | The Binomial Distribution | The Poisson Distribution | The Exponential Distribution | The Normal Distribution | The Beta Distribution | Probability Distributions and Decision-Analysis Software | Summary | Exercises | Questions and Problems | Case Studies: Overbooking | Earthquake Prediction | Municipal Solid Waste | References | Epilogue
Using Data | Using Data to Construct Probability Distributions | Histograms | Empirical CDFs | Halfway Houses | Using Data to Fit Theoretical Probability Models | Software for Fitting Distributions: BESTFIT | Using Data to Model Relationships | The Regression Approach | Estimation: The Basics | Estimation: More than One Conditioning Variable | Regression Analysis and Modeling: Some Do's and Don't's | Regression Analysis: Some Bells and Whistles | Regression Modeling: Decision Analysis Versus Statistical Inference | An Admonition: Use with Care | Natural Conjugate Distributions (Optional) | Uncertainty About Parameters and Bayesian Updating | Binomial Distributions: Natural Conjugate Priors for p | Normal Distribution: Natural Conjugate Priors for m | Predictive Distributions | Predictive Distributions: The Normal Case | Predictive Distributions: The Binomial Case | A Bayesian Approach to Regression Analysis (Optional) | Summary | Exercises | Questions and Problems | Case Studies: Taco Shells | Forecasting Sales | Overbook, Part 11 | References
Monte Carlo Simulation | Fashions | Using Uniform Random Numbers as Building Blocks | General Uniform Distributions | Exponential Distributions | Discrete Distributions | Other Distributions | Computer Software for Simulation | CRYSTAL BALL | @ RISK | Simulation and Sensitivity Analysis | Distributions on Parameters (Optional) | Simulation, Decision Trees, and Influence Diagrams | Summary | Exercises | Questions and Problems | Case Studies: Choosing a Manufacturing Process | Organic Farming | Overbooking, Part 111 | References
Value of Information | Investing in the Stock Market | Value of Information: Some Basic Ideas | Probability and Perfect Information | The Expected Value of Information | Expected Value of Perfect Information | Expected Value of Imperfect Information | Value of Information in Complex Problems | Value of Information, Sensitivity Analysis, and Structuring | Seeding Hurricanes | Value of Information and Nonmonetary Objectives | Value of Information and Experts | Calculating EVPI: DATA and DPL | Summary | Exercises | Questions and Problems | Case Studies: Texaco-Pennzoil Revisited | Medical Tests | Dumond International, Part 11 | References
Risk Attitudes | E. H. Harriman Fights for the Northern Pacific Railroad | Risk | Risk Attitudes | Investing in the Stock Market, Revisited | Expected Utility, Certainty Equivalents, and Risk Premiums | Keeping Terms Straight | Utility Function Assessment | Assessment Using Certainty Equivalents | Assessment Using Probabilities | Gambles, Lotteries, and Investments | Risk Tolerance and the Exponential Utility Function | Risk Tolerance and Sensitivity Analysis: Eagle Airlines, Revisited | Decreasing and Constant Risk Aversion (Optional) | Decreasing Risk Aversion | An Investment Example | Constant Risk Aversion | Some Caveats | Summary | Exercises | Questions and Problems | Case Studies: Interplants, Inc. | Texaco-Pennzoil One More Time | Strenlar, Part III | References | Epilogue
Utility Axioms, Paradoxes, and Implications | Preparing for an Influenza Outbreak | Axioms for Expected Utility | Paradoxes | Implications | Implications for Utility Assessment | Managerial and Policy Implications | A Final Perspective | Summary | Exercises | Questions and Problems | Case Studies: The Life Insurance Game | Nuclear Power Paranoia | The Manager's Perspective | References | Epilogue
Conflicting Objectives I: Fundamental Objectives and the Additive Utility Function | Objectives and Attributes | Trading Off Conflicting Objectives: The Basics | Choosing an Automobile: An Example | The Additive Utility Function | Choosing an Automobile: Proportional Scores | Assessing Weights: Pricing Out the Objectives | Indifference Curves | Assessing Individual Utility Functions | Proportional Scores | Ratios | Standard Utility-Function Assessment | Assessing Weights | Pricing Out | Swing Weighting | Lottery Weights | Keeping Concepts Straight: Certainty Versus Uncertainty | An Example: Library Choices | The Eugene Public Library | Using Software for Multiple-Objective Decisions | Summary | Exercises | Questions and Problems | Case Studies: The Satanic Verses | Dilemmas in Medicine | A Matter of Ethics | FDA and the Testing of Experimental Drugs | References | Epilogue
Conflicting Objectives II: Multiattribute Utility Models with Interactions | Multiattribute Utility Functions: Direct Assessment | Independence Conditions | Preferential Independence | Utility Independence | Determining Whether Independence Exists | Using Independence | Additive Independence | Substitutes and Complements | Assessing A Two-Attribute Utility Function | The Blood Bank | Three or More Attributes (Optional) | When Independence Fails | Multiattribute Utility in Action: BC Hydro | Strategic Decisions at BC Hydro | Summary | Exercises | Questions and Problems | Case Studies: A Mining-Investment Decision | References | Epilogue
Conclusion and Further Reading | A Decision-Analysis Reading List
A Binomial Distribution: Individual Probabilities
B Binomial Distribution: Cumulative Probabilities
C Poisson Distribution: Individual Probabilities
D Poisson Distribution: Cumulative Probabilities
E Normal Distribution: Cumulative Probabilities
F Beta Distribution: Cumulative Probabilities
Answers to Selected Exercises
Index