Advances In Decision Analysis: From Foundations To Applications

P1: KAE 0521863686pre CUFX077/Edwards 0 521 86368 6 Printer: sheridan This page intentionally left blank ii August 6, 2007 12:29 P1: KAE 0521863686pre CUFX077/Edwards 0 521 86368 6 Printer: sheridan August 6, 2007 ADVANCES IN DECISION ANALYSIS Decision analysis consists of a prescriptive theory and associated models and tools that aid individuals or groups confronted with complex decision problems in a wide variety of contexts. Decision analysis can offer workable solutions in domains such as the environment, health and medicine, engineering, public policy, and business. This book extends traditional textbook knowledge of decision analysis to today’s state of the art. Part I covers the history and foundations of decision analysis. Part II discusses structuring decision problems, including the development of objectives and their attributes, and influence diagrams. Part III provides an overview of the elicitation and aggregation of probabilities and advances in model building with influence diagrams and belief networks. Part IV discusses utility and risk preferences, practical value models, and extensions of the subjective expected utility model. Part V consists of an overview of advances in risk analysis. Part VI puts decision analysis in a behavioral and organizational context. Part VII presents a selection of major applications. Ward Edwards (1927–2005) received his Ph.D. in psychology from Harvard University. He was the recipient of many awards, including the Frank P. Ramsey Medal from the Decision Analysis Society of INFORMS in 1988 and the Distinguished Scientific Contributions Award in Applied Psychology from the American Psychological Association in 1996. He wrote more than 100 journal articles and books, including Decision Analysis and Behavioral Research and Utility Theories: Measurement and Applications. Ralph F. Miles, Jr., received his Ph.D. in physics from the California Institute of Technology and is a consultant in risk and decision analysis. He was the editor and coauthor of Systems Concepts and has written many articles. Until 1991, he worked as an engineer, supervisor, and manager in the Jet Propulsion Laboratory (JPL) at the California Institute of Technology. At JPL he was the Spacecraft System Engineer for two flights to Mars. He was awarded the NASA Exceptional Service Medal for his contributions to early mission design and spacecraft development in the role of Mission Analysis and Engineering Manager for the Voyager Mission to Jupiter, Saturn, Uranus, and Neptune. Detlof von Winterfeldt is Professor of Industrial and Systems Engineering and of Public Policy and Management at the University of Southern California (USC). He is also Director of the Homeland Security Center for Risk and Economic Analysis of Terrorist Events at USC. He received his Ph.D. in psychology from the University of Michigan. He cowrote Decision Analysis and Behavioral Research with Ward Edwards and has published more than 100 articles and reports on decision and risk analysis. He is a Fellow of the Institute for Operations Research and the Management Sciences (INFORMS) and of the Society for Risk Analysis. In 2000 he received the Frank P. Ramsey Medal for