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Decision Making Under Uncertainty—Preference Curve, Sequential Analysis, and Multiple Criteria Assessment

In: Strategic Management Accounting in a Network Economy

Author

Listed:
  • Wingsun Li

    (Beijing Normal University & Hong Kong Baptist University—United International College)

Abstract

This chapter further explains complex decision-making issues related to preference curves, sequential analysis, and multiple criteria assessment. The expected value calculation in decision trees typically assumes risk-neutral behavior. However, when decision makers exhibit strong preferences towards risk aversion or risk-taking, it becomes necessary to address their specific behaviors. The preference curve provides a means to understand and account for the impact of these risk behaviors. As a matter of fact, complex decision situations often involve choices across multiple stages of analysis. Sequential analysis proves to be a valuable technique, which employ rollback procedure to resolve sequential decision problems. Furthermore, decision choices may also be influenced by multiple considerations. In such cases, the final selection in the multiple criteria assessment can be determined through the use of satisficing and tradeoff procedures. These particular topics and techniques are helpful in the real world in dealing with complicated issues abound.

Suggested Citation

  • Wingsun Li, 2023. "Decision Making Under Uncertainty—Preference Curve, Sequential Analysis, and Multiple Criteria Assessment," Management for Professionals, in: Strategic Management Accounting in a Network Economy, chapter 0, pages 43-65, Springer.
    • Handle: RePEc:spr:mgmchp:978-981-99-5253-3_3
    DOI: 10.1007/978-981-99-5253-3_3
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