Author: Ralph L. Keeney
There is a significant gap between the input and output information of many systems analysis models and what decision makers can control and care about. What they can control is the choice of policies, not the scenarios. What they care about is how well their objectives are met, which may include how well their stakeholders’ concerns are addressed. To enhance the usefulness of applied systems analyses to decision makers requires expanding the breadth of these analyses to have the decision makers’ policies as inputs, and the impacts that they directly care about as outputs. These outputs need to be linked to value models that quantitatively represent the preferences of a decision maker as an equation. A value model includes the fundamental objectives of the decision maker, its risk attitudes, and its value trade‑offs. This presentation describes the steps required to construct a useful and practical value model. For each step, the information required is indicated and how the information should be obtained is discussed. In addition, common pitfalls and mistakes at each of the steps are indicated.
Professor Ralph L. Keeney received his PhD from the Massachusetts Institute of Technology. He is research professor emeritus of Business Administration at Duke University, USA, and professor emeritus of Industrial and Systems Engineering at the University of Southern California, USA. He is an authority on decision analysis, decision making with multiple objectives, and value-focused thinking. His research interests include value models involving multiple objectives, risk analysis involving life-threatening risks, structuring decisions, and creating innovative alternatives. During his professional career, Keeney has consulted on a wide range of decisions including corporate management problems, public policy, risk analyses, and energy decisions. Keeney’s books, which have been translated into numerous languages, include “Decisions with Multiple Objectives” with Howard Raiffa (1976, 1993), “Value-Focused Thinking: A Path to Creative Decisionmaking” (1992), and “Smart Choices: A Practical Guide to Making Better Decisions”, with John S. Hammond and Howard Raiffa (1999). He recently received an honorary doctorate from the University of Waterloo in Canada and is a member of the US National Academy of Engineering.