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.