Decision analysis - Definition and Overview

Decision analysis (DA) is the discipline comprising the philosophy, theory, methodology, and professional practice necessary to address important decisions in a formal manner. Decision analysis includes many procedures, methods, and tools for identifying, clearly representing, and formally assessing the important aspects of a decision situation, for computing the recommended course of action by applying the maximum expected utility action axiom to a well-formed representation of the decision, and for translating the formal representation of a decision and its corresponding recommendation into insight for the decision-maker and other decision participants.

The term decision analysis was coined in 1964 by Ronald A. Howard, who since then, as a professor at Stanford University, has been instrumental in developing much of the practice and professional application of DA.

Bibliography

• Clemen, Robert, Making Hard Decisions: An Introduction to Decision Analysis, 2^nd edition (1996), Belmont CA: Duxbury Press, 1996.
• Goodwin, P., and G. Wright, Decision Analysis for Management Judgment, 3^rd edition (2004). Wiley, Chichester. ISBN 0-470-86108-8
• Holtzman, Samuel, Intelligent Decision Systems (1989), Addison-Wesley.
• Howard, R.A., and J.E. Matheson (editors), Readings on the Principles and Applications of Decision Analysis, 2 volumes (1984), Menlo Park CA: Strategic Decisions Group.
• Raiffa, Howard, Decision Analysis: Introductory Readings on Choices Under Uncertainty (1997). McGraw Hill. ISBN 0-07-052579-X
• Smith, J.Q., Decision Analysis: A Bayesian Approach (1988), Chapman and Hall. ISBN 0-412-27520-1

See also

• Decision analysis cycle
• Decision model
• Decision theory
• Influence diagram
• Maximum expected utility