DECISION TREE MODELS

The Importance of Modeling in Decision Analysis

Decision analysis includes the formulation of objectives; identification of resources and constraints; the formulation of appropriate assumptions; the development of alternative solutions; and the drawing of conclusions and the formulation of recommendations, with respectáto the selected alternative course of action. Once a decision maker has defined the problem correctly, the use of models has the advantage of allowing the analysis to focus more directly in the variables involved in the problem (Stokey & Zeckhauser, 1978). As an example, if a policy maker is concerned about the issue of global warming, there are several different approaches that could be applied to the analysis.

If the overriding focus is on minimizing the costs effects on today's economy of reducing greenhouse gases, the policy maker would select an economic model. The structuring of that model would measure the costs of reducing greenhouse gasses over a short-term period ù perhaps three ye

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Approximate Word count = 1035
Approximate Pages = 4 (250 words per page)

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