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Probability and Beyond: Including Uncertainties in Decision Analysis

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Behavioral Operational Research

Abstract

This chapter presents behavioral issues arising from various approaches for including risk and uncertainty in multi-criteria decision analysis (MCDA). The chapter is a behaviorally oriented reassessment and reinterpretation of our earlier reviews on uncertainty modeling in MCDA, updated to include recent developments. We review the limitations of probability models and how these limitations can be partially overcome, while remaining in a conventional probability modeling framework, through the use of debiasing tools. We then focus on an approach outside of the conventional probability framework: the use of scenario planning. While scenario planning is not in its origins a quantitative tool, it is often so adopted in OR, with quantification of alternative performances, preference parameters, and even dubious assignment of scenario probabilities. We discuss different ways in which authors have interpreted these quantities, and assess the behavioral implications of these. Under this heading, we discuss cognitive perceptions of scenarios; the validity of viewing performance under a scenario as a dimension of preference, akin to a criterion; and the implications of treating decision aiding under uncertainty as an extended multi-criterion problem.

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Notes

  1. 1.

    Note that these approaches do not employ probability concepts, although they do include other quantitative features which we outline in the next two sections.

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Author information

Authors and Affiliations

  1. Centre for Research into Ecological and Environmental Modelling, University of St Andrews, St Andrews, Scotland, UK

    Ian N. Durbach

  2. Centre for Statistics in Ecology, the Environment and Conservation, Department of Statistical Sciences, University of Cape Town, Cape Town, South Africa

    Ian N. Durbach

  3. African Institute for Mathematical Sciences, Cape Town, South Africa

    Ian N. Durbach

  4. Department of Statistical Sciences, University of Cape Town, Cape Town, South Africa

    Theodor J. Stewart

Authors
  1. Ian N. Durbach
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  2. Theodor J. Stewart
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Correspondence to Ian N. Durbach .

Editor information

Editors and Affiliations

  1. Warwick Business School, University of Warwick, Coventry, UK

    Leroy White

  2. Southampton Business School, University of Southampton, Southampton, UK

    Martin Kunc

  3. School of Economics, Finance and Management, University of Bristol, Bristol, UK

    Katharina Burger

  4. Applied Research, BT, Martlesham Heath, UK

    Jonathan Malpass

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Durbach, I.N., Stewart, T.J. (2020). Probability and Beyond: Including Uncertainties in Decision Analysis. In: White, L., Kunc, M., Burger, K., Malpass, J. (eds) Behavioral Operational Research. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-25405-6_5

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