Logical Decisions - Classweb

! Point Estimate -- use a single number as the level. This is
the default.
! Uniform Distribution -- define the level with a uniform
probability distribution defined by an upper and
lower limit.
! Discrete Distribution -- define the level as several
different levels, each of which with its own
probability.
! Piecewise Linear Cumulative Distribution -- define the
level with several levels that define a cumulative
probability distribution.
! Normal Distribution -- define the level with a Normal
(bell shaped curve) probability distribution.
! Three Point Estimate -- define the level with three points
of the probability distribution: the 0.05 level, the
0.50 level and the 0.95 percent level.
! Triangle Distribution -- define the level with a triangle
distribution defined by the minimum, most likely
and maximum levels.
You select a distribution type by clicking the radio button for that
type. Then LDW asks you to enter the parameters for that
distribution.
After you enter the data, LDW displays the resulting certainty
equivalent. The certainty equivalent is the point estimate level
that has the same utility as the expected utility of the probabilistic
level. LDW computes expected utility by combining the level's
probability distribution with the associated measure’s utility
function.
The sections below describe the parameters that define the
different probability distributions.
Point Estimate. The Point Estimate option lets you define a single
number as the level of the active measure and alternative. Point
estimates are the default, and the measure levels entered
elsewhere are point estimates.
6-22 Section 6 -- Using LDW 1: Structuring