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The Theoretical Foundation of Decision Analysis 

Presented by Steve Tani –SDG and SDP Fellow, 
SDP Webinar - DA Fundamentals Series

This presentation is the first of a series of quarterly SDP webinars entitled "DA Fundamentals Webinars".
The theoretical foundation of decision analysis is expressed as five simple rules of rational behavior.  For anyone who chooses to follow these rules, there exists a mapping of value outcomes to a unit-less metric called u-value, such that the best choice in any decision for that person is the alternative with the highest mean u-value. A commonly-used sixth rule strongly restricts the mapping to one that can be easily assessed quantitatively.  For a decision with a sufficiently restricted range of outcomes, the best alternative is the one with the highest expected value.

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Keywords: multi-objective multobj, decision theory, monetary equivalent, certain equivalent, risk tolerance, risk aversion riskaver

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