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3. Basic Tools for Applied Decision Theory
Pages 12-19

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From page 12...
... At that time the control and systems engineering ilevelopment during World War II was available to make practical the application of fundamental ideas about decision making under uncertainty to the actual problems faced by decision nickers. The new field of decision analysis provided both a formal, systematic way to analyze decisions and an important communication medium for achieving mutual understanding between decision makers and those who advise them.
From page 13...
... A good decision is cane that is systematically correct given a decision situation properly framed by a committed decision maker. The specific description of this situation the decision basis.
From page 14...
... This dimension is essential in purely financial decisions, but it also has application in, for example, medical decisions, where the patient's quality of lid must be balanced against the duration of life, and in any other decisions where the attributes of the future must be balanced against the attributes of the near term. The third dimension of preference is risk preference.
From page 15...
... Observing the growing automobile revolution, however, the homing would more appropriately address how to change the product line to serve the new demands rip automobile owners while phasing out buggy whip production. F7raming is the most crit~caliart of ~~;~mcess of decision making, because making the right decision in the wrong decision frame can be a sertr~us error.
From page 16...
... Sbu~re Figure 3-5 Decision diagram. Wliat :7 YOU Abet Am/ ~ C(col~)
From page 17...
... Ohe-n the successful practice of decision analysis requires a complete reframing of the originally contemplated decision. Professional decision analysts also ensure that the decision maker is actively involved in the decision-making process, to gain their commitment both to the process and to any resulting; decisions.
From page 18...
... Design \~ In/ ~ \ | Frame Design ~` ~ 1 —~ ~ \ y\~_t \ 1 <>= |Elecinc stars | ~nce/Performance J ~ \ S`rr(3llt ) Market / Share Figure 3-6 Decision diagram for design of a dual-~;port motorcycle.
From page 19...
... A series of tornadr, diagrams would show engineers at all levels of the design process the economic implications of their decisions. 19 ~ r 1 1 Creative Alternatives A useful guide In assessing decision quality is the spider diagram shown in Figure 3-8.


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