Published by:
Harvard Business Publishing
Length: 12 pages
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Abstract
Decision analysts'' new technology combines statistical decision theory with insights from psychology, economics, and social science. Decision tree analysis by the AIL Division of Cutler-Hammer, Inc. shows how analysts specify the elements of the tree, assign each element a value, and calculate the results to determine whether to develop a patent. Probabilistic forecasting has the advantage of not limiting forecasting to extrapolation from the past. It combines assessments of judgment with data. Multiattribute utility analysis specifies all factors that affect a choice, allows trade-offs to be made among those factors, and indicates the alternative offering the best balance.
About
Abstract
Decision analysts'' new technology combines statistical decision theory with insights from psychology, economics, and social science. Decision tree analysis by the AIL Division of Cutler-Hammer, Inc. shows how analysts specify the elements of the tree, assign each element a value, and calculate the results to determine whether to develop a patent. Probabilistic forecasting has the advantage of not limiting forecasting to extrapolation from the past. It combines assessments of judgment with data. Multiattribute utility analysis specifies all factors that affect a choice, allows trade-offs to be made among those factors, and indicates the alternative offering the best balance.