# A Tutorial Introduction to Decision Theory

11 Pages · 2006 · 2.25 MB · English

decision theory is available from many sources, most notably Applied Statistical Decision Theory. Boston, Mass.: Graduate School of Business, Harvard Uni-

IEEE TRANSACTIONS ON SYSTEMS SCIENCE AND CY13ERNETICS, VOL. SSC-4, NO. 3, SEPTEMLIER 1968 A Tutorial Introduction to Decision Theory D. WARNER NORTH Abstract-Decision theory provides a rational framework for choosing between alternative courses of action when the conse- quences resulting from this choice are imperfectly known. Two streams of thought serve as the foundations: utility theory and the inductive use of probability theory. The intent of this paper is to provide a tutorial introduction to this increasingly important area of systems science. The foundations are developed on an axiomatic basis, and a simple example, the "anni- versary problem," is used to illustrate decision theory. The concept of the value of information is developed and demonstrated. At times mathematical rigor has been subordinated to provide a clear and readily accessible exposition of the fundamental assumptions and concepts of decision theory. A sampling of the many elegant and rigorous treatments of decision theory is provided among the references. INTRODUCTION THE NECESSITY of makinig decisions in the face of uncertainty is an integral part of our lives. We must act without knowing the consequeinces that will result from the action. This uncomfortable situation is partic- ularly acute for the systems engineer or manager who must make far-reaching decisions oIn complex issues in a rapidly changing technological environment. Uncertainty appears as the dominant consideration in many systems problems as well as in decisions that we face in our personal lives. To deal with these problems oii a rational basis, we must develop a theoretical structure for decisiotn making that includes uncertainity. Confronting uncertainty is Inot easy-. We naturally try to avoid it; sometimes we even pretend it does not exist. Our primitive ancestors sought to avoid it by consulting soothsayers and oracles who would "reveal" the uncertain future. The methods have changed: astrology and the reading of sheep entrails are somewhat out of fashion to- day, but predictions of the future still abound. Much current scientific effort goes into forecasting future eco- nomic and technological developments. If these predictions are assumed to be completely accurate, the uncertainty in many systems decisions is eliminated. The outcome result- ing from a possible course of action may then be presumed to be known. Decision making becomes an optimization problem, and techniques such as mathematical program- ming may be used to obtain a solution. Such problems may be quite difficult to solve, but this difficulty should Manuscript received M\ay 8, 1968. An earlier version of this paper was presented at the IEEE Systems Science and Cybernetics Con- ference, Washington, D.C., October 17, 1966. This research was sup- ported in part by the Graduate Cooperative Fellowship Program of the National Science Foundation at Stanford University, Stanford, Calif. The author is with the Systems Sciences Area, Stanford Research Institute, MTenlo Park, Calif. 94025. not obscure the fact that they represent the limiting case of perfect predictions. It is often tempting to assume perfect predictions, but in so doing we may be eliminatinig the most important features of the problem.' We should like to include in the analysis not just the predictions themselves, but also a measure of the confidence we have in these predictions. A formal theory of decision making must take uncertainty as its departure point and regard precise knowledge of outcomes as a limiting special case. Before we begin our exposition, we will clarify our point of view. We shall take the enginieering rather than the purely sc ientific viewpoint. We are not observing the way people make decisions; rather we are participanits in the decision-making process. Our concerin is in actually making a decision, i.e., making a choice between

### Simple Steps to Online Fundraising Success

1 Pages · 2010 · 32 KB · English

### A Typology of Victim Characterization in Television Crime Dramas

33 Pages · 2010 · 278 KB · English

her analysis of one season of Law & Order, NYPD Blue, and The Practice. She found that only

### Disclosing to Better Shine

44 Pages · 2008 · 8.09 MB ·

Perini line, as well as to ensure the succession of the service staff in the conversion a first for France: wood gasification technology, the 30-million- .. The Premio Venezia competition jury, made up of various. Québec and Italian .. Patricia holds an advanced graduate diploma in public relatio

### The European Car Parking Sector Sees M&A Flurry, But Will It Be An Easy Ride For Investors?

11 Pages · 2017 · 813 KB · English

The European Car Parking Sector Sees M&A Flurry, But Will It Be An Easy Ride For Investors? spglobal.com/ratingsdirect. Dec. 6, 2017. 2. Despite lots of M&A activity in the. European car parking sector, the future is somewhat uncertain. Acquisitions are the major growth catalyst for operators, but

### An integrated approach to product design and process selection

48 Pages · 2011 · 2.15 MB ·

Narayan Raman .. M? < Bs% .. a geometric series given by TEMP(y) = r * TEMP(

### Sens Actuat A (2007) Eom K.pdf

6 Pages · 2006 · 667 KB ·

solution for Eq. (1) provides the resonant frequencies fi of the microcantilevers. of protein molecules based on statistical physics theory. His current

### Rounding Algorithms for a Geometric Embedding of Minimum Multiway Cut

12 Pages · 2010 · 187 KB ·

between its embedded volume and minimum 3-way cut. and 5 we solve the 3-terminal case, giving matching up- cut of any embedded graph.

### ENTERPRISE, ENBRIDGE AND ANADARKO TO JOINTLY

4 Pages · 2012 · 111 KB · English

ENTERPRISE, ANADARKO, AND DCP MIDSTREAM TO JOINTLY DEVELOP NEW NGL PIPELINE TO SERVE COLORADO'S DENVER-JULESBURG BASIN Houston and The Woodlands, Texas and Denver

### TIX Fun Deck (Group Area) Swinging pirate ship with a heart

1 Pages · 2010 · 3.41 MB · English

Midway Games Midway Games Desperados Hideaway (Group Area) all n) Arcade Smoking Area ATS ATS Tick et s S w e e t Join SpongeBob SquarePants and his Bikini Bottom

### A Socioeconomic Portrait Of Prince Hall Masonry In Nebraska, 1900-1920

14 Pages · 2013 · 1.18 MB ·

craft of stone masons), who demanded moral and ethical conduct, and who promoted "self- help" and . names-e.g., the 1920 Omaha City Directory listed nine .. cement contractor( 1) trained nurse. 2 . can Dilemma (1944; rpt.