lecture3 - The Decision-Making Process Part II ISQM 474 R....

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
The Decision-Making Process Part II ISQM 474 R. Nakatsu
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Overview, P. II Why is decision-making so hard? Decision trees Subjective utility and risk Influence diagrams Rational decision-making Bounded rationality Decision style
Background image of page 2
Why is decision-making so hard? Uncertainty Organizational issues Economic/environmental pressures Cognitive limitations of humans Many alternatives to choose from Multiple objectives
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Decision Trees Squares represent decision points. The branches emanating from the square are the alternatives. Circles represent chance events. The branches emanating from the circle are the possible outcomes.
Background image of page 4
Subjective Utility Subjective utility is what a decision maker values (e.g., it may or may not be a dollar amount). A utility curve is a function that maps the amount of something to its value to the person.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
An Example of a Utility Function R is called the risk tolerance Smaller values of R would model highly risk-
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 15

lecture3 - The Decision-Making Process Part II ISQM 474 R....

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online