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.

RELATED TERMS
  1. Decision Tree

    A schematic tree-shaped diagram used to determine a course of ...
  2. Stock Analysis

    Stock analysis is a term that refers to the evaluation of a particular ...
  3. Analysis Paralysis

    Occurs when an individual becomes so lost in the process of examining ...
  4. Investment Analysis

    The study of how an investment is likely to perform and how ...
  5. Quantitative Analysis

    A business or financial analysis technique that seeks to understand ...
  6. Financial Economics

    A branch of economics that analyzes the use and distribution ...
Related Articles
  1. Investing

    Using Decision Trees In Finance

    A decision tree provides a comprehensive framework to review the alternative scenarios and consequences a decision may lead to.
  2. Trading

    Using Decision Trees In Finance

    These decision-making tools play an integral role in corporate finance and economic forecasting.
  3. Trading

    What is Quantitative Analysis?

    Quantitative analysis refers to the use of mathematical computations to analyze markets and investments.
  4. Financial Advisor

    Asset Manager Ethics: Acting With Competence and Diligence

    Managers must make investment decisions based on their personal investment process, which in turn should be based on solid research and due diligence.
  5. Trading

    Does Your Personality Match Your Trading Methods?

    Investing has ways to successfully accommodate a variety of personalities. Learn how to align your trading with your traits.
  6. Investing

    Explaining Financial Analysis

    Financial analysis is a general term that refers to using financial data to make business and investment decisions.
  7. Managing Wealth

    Use Price Action Trading Strategy for Results

    Bored by the fixed rules of technical and fundamental analysis? Price action trading allows you to customize your own trading strategy.
  8. ETFs & Mutual Funds

    How's Your Mutual Fund Really Doing?

    Determine how fund managers are doing by sizing them up against their peers.
  9. Investing

    Explaining Financial Statement Analysis

    Financial statement analysis is the process of reviewing a company’s statements to gain an understanding of its financial health.
  10. Trading

    Basics Of Technical Analysis

    Learn how chartists analyze the price movements of the market. We'll introduce you to the most important concepts in this approach.
RELATED FAQS
  1. Is it better to use fundamental analysis, technical analysis or quantitative analysis ...

    Understand the difference between fundamental, technical and quantitative analysis, and how each measurement helps investors ... Read Answer >>
  2. How legitimate are companies that advertise debt consolidation for all my credit ...

    Learn about how fundamental analysis ratios can be combined with quantitative stock screening methods and how technical indicators ... Read Answer >>
  3. How are business decisions made in a partnership?

    Understand how partners in a business can tackle decision making, and learn the options available for partnerships to develop ... Read Answer >>
  4. How can I use expected return with my risk profile to make an investment decision?

    Understand the basic concepts of expected returns, risk tolerance and risk-adjusted returns, and how investors use these ... Read Answer >>
  5. What is the difference between capital investment decision and current asset decision?

    Learn how capital investment decisions are long-term funding decisions, while current asset decisions are short-term funding ... Read Answer >>
  6. What are common use cases for marginal analysis?

    Read about some of the common uses of marginal analysis, including cost-benefit decisions in business or deciding how to ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center