Structuring Conditional Relationships in Influence Diagrams

James E. Smith, Samuel Holtzman and James E. Matheson
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James E. Smith: Duke University, Durham, North Carolina
Samuel Holtzman: Strategic Decisions Group, Menlo Park, California
James E. Matheson: Strategic Decisions Group, Menlo Park, California

Operations Research, 1993, vol. 41, issue 2, 280-297

Abstract: An influence diagram is a graphical representation of a decision problem that is at once a formal description of a decision problem that can be treated by computers and a representation that is easily understood by decision makers who may be unskilled in the art of complex probabilistic modeling. The power of an influence diagram, both as an analysis tool and a communication tool, lies in its ability to concisely summarize the structure of a decision problem. However, when confronted with highly asymmetric problems in which particular acts or events lead to very different possibilities, many analysts prefer decision trees to influence diagrams. In this paper, we extend the definition of an influence diagram by introducing a new representation for its conditional probability distributions. This extended influence diagram representation, combining elements of the decision tree and influence diagram representations, allows one to clearly and efficiently represent asymmetric decision problems and provides an attractive alternative to both the decision tree and conventional influence diagram representations.

Keywords: decision analysis; influence diagrams: representing and solving decision problems (search for similar items in EconPapers)
Date: 1993
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Citations: View citations in EconPapers (17)

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