ESP168a.f09.lecture11.11.10.09

ESP168a.f09.lecture11.11.10.09 - ESP 168a Environmental...

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Unformatted text preview: ESP 168a Environmental Policy Analysis Lecture 11: Decisions under uncertainty and risk: Decision analysis and Utility theory Joan Ogden October 21, 2010 jmogden@ucdavis.edu Questions: How do we make a decision when outcomes are uncertain or depend on a sequence of events? How do we deal with risk? Decision analysis is useful when: Decisions must be made sequentially Uncertainty is a major factor Decision Trees: Descriptive Graphical Model of decisions with uncertainty. Decision nodes (at this point a choice is made among alternatives) Chance nodes (at this point an uncertainty must be resolves one way or another) Probabilities of each outcome Payoffs for each possible combination of choices Decision Analysis: an example Driving to Tahoe You are planning to go skiing at Tahoe this weekend, and are choosing the best route to drive from Davis Friday night. Your choices are route 50 and route 80. Your goal is to minimize the time you have to spend driving. In good weather with light traffic, it takes about 2 hours with route 50 and 2.5 hours with route 80.route 50 and 2....
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ESP168a.f09.lecture11.11.10.09 - ESP 168a Environmental...

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