Computer system and method for decision tree analysis

Abstract

A tool to aid decision-makers in making non-programmed decisions in an uncertain environment. A small computer having graphic display capabilities is combined with a program which provides the means for operating the computer directly by the decision-maker. Problems are stated in decision-tree format with the decision-maker providing probabilities for chance events, terminal values and points on his preference curve. The computer makes choices at decision nodes on the basis of maximization of expected value or utility and displays both the expectation of the project and the decision path. Automated sensitivity analysis is provided to determine those probabilities lying on the decision path which are most sensitive in changing either that path or the expectation. In addition, the effects of varying the probability of any selected branch may be determined. Instructions appear on the display and the user's response is by selecting a program alternate with the light pen or typing a numeral. All results are given on the display.

Description