290_05_Decision_Analysis - Introduction to Decision...

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1 1 Introduction to Decision Analysis for Public Policy Decision-Making Ross D. Shachter Management Science and Engineering Stanford University © Ross D. Shachter 2 British Decision to Develop Radar During WWII © Ross D. Shachter 3 British Decision to Develop Radar During WWII Choice between Infrared and Radar to detect German bombers Churchill protégé advocated infrared, which would have been ineffective Consequence: infrared would not have prevented a German invasion Right decision by chance © Ross D. Shachter 4 The Serenity Prayer God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference. Reinhold Niebuhr (1892-1971) Inspired by Friedrich Oetinger and Boethius. Uncertainties Decisions Decision Analysis © Ross D. Shachter 5 Actional Thought Some of our actions merit thought and reflection. Not all of our thoughts are focused on interventions we can make in our world. Decision analysis lets us think clearly about a complex problem so that we can choose those actions that yield our preferred prospect. The quality of a decision is determined by the process we use, not by the eventual outcome. A good decision can lead to a bad outcome. Action Thought © Ross D. Shachter 6 Bayesian Perspective We measure our beliefs about thosee uncertain possibilities we care about using probabilities. Those probabilities are based on our current state opinions, and observation. (There are no “objective” probabilities.) The possibilities are distinctions we impose on the world. We define them with enough clarity that the uncertainty arises from our lack of knowledge, rather than from ambiguity.
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2 © Ross D. Shachter 7 Decision Analysis for Public Policy Individual Decision Maker
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290_05_Decision_Analysis - Introduction to Decision...

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