Decision Analysis - DA

DEFINITION of 'Decision Analysis - DA'

A systematic, quantitative and visual approach to addressing and evaluating important choices confronted by businesses. Decision analysis utilizes a variety of tools to evaluate all relevant information to aid in the decision making process. A graphical representation of alternatives and possible solutions, as well as challenges and uncertainties, can be created on a decision tree or influence diagram.

The term decision analysis originated in 1964 by Ronald A. Howard, professor of Management Science and Engineering at Stanford University.

BREAKING DOWN 'Decision Analysis - DA'

Decision analysis can be employed by large corporations when making multi-billion dollar capital investments. Critics of decision analysis cite "analysis paralysis" - the over-thinking of a situation to the point that no decision can be made - as a negative and likely outcome of decision analysis practices. In addition, some researchers who study the methodologies utilized by decision makers argue that this type of analysis is not often used.

Trading Center