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Unformatted text preview: invoke a von
Neumann-Morgenstem selection rule. In this case,
alternatives are treated as "gambles" (or lotteries). The
probability of each outcome is also known or can be
subjectively estimated, usually by creating a decision
tree. The von Neumann-Morgenstem selection rule
applies a separately developed utility function to each
outcome, and chooses the alternative that maximizes
the expected utility. This selection rule is easy to apply when the lottery outcomes can be measured in dollars.
Although multi-attribute cases are more complex, the
principle remains the same.
The basis for the von Neumann-Morgenstem
selection rule is a set of mathematical axioms about
how individuals should behave when confronted by
uncertainty. Practical application of this rule requires an
ability to enumerate each "state of nature" (hereafter,
simply called "state"), knowledge of the outcome
associated with each enumerated state for each
alternative, the probabilities for the various states, and a
mathematical expression for the decision maker's utility
function. This selection rule has also found use in the
evaluation of system procurement alternatives. See
Section 4.6.3 for a discussion of some related topics,
including decision analysis, decision trees, and
probabilistic risk assessment.
Another selection rule for this class of decision
problem is called the minimax rule. To apply it, the system engineer computes a loss function for each
enumerated state for each alternative. This rule chooses
the alternative that minimizes the maximum loss.
Practical application re- NASA Systems Engineering Handbook
Systems Analysis and Modeling Issues
quires an ability to enumerate each state and define the
loss function. Because of its "worst case" feature, this
rule has found some application in military systems.
5.1.4 Trade Study Process: Summary System architecture and design decisions will be
made. The purpose of the trade study process is to
ensure that they move the...
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