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HERESY IN DECISION ANALYSIS: MODELING SUBSEQUENT ACTS WITHOUT ROLLBACK *
Author(s) -
Brown Rex V.
Publication year - 1978
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1978.tb00744.x
Subject(s) - commit , computer science , decision analysis , subject (documents) , decision theory , economics , mathematical economics , risk analysis (engineering) , operations research , microeconomics , mathematics , business , database , library science
When making a current decision, like choosing an experiment, a subject will often take into account “subsequent acts” which he does not yet commit to. Common practice requires modeling through preposterior analysis, which treats one act as certain, conditional on the intervening information modeled. This is not logically necessary since the same expected utilities could be obtained by properly conditioning utility on any selection of events (including subsequent acts). The subject could assess utility marginal on subsequent acts or conditional on subsequent acts treated as uncertain events. The preposterior model is a special case of the latter where conditioning information is sufficiently modeled to imply subsequent act probabilities of zero or one. This paper argues that attempts at preposterior modeling are often unsuccessful and have critically flawed much current practice in decision analysis. Simpler approaches such as the “acts‐as‐events” model are intrinsically less dependent on restrictive assumptions and have been successfully applied to many real‐world decisions.