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4 - Decision Analysis: A Personal Account of How It Got Started and Evolved

Published online by Cambridge University Press:  05 June 2012

By
Howard Raiffa
Edited by
Ward Edwards ,
Ralph F. Miles Jr.  and
Detlof von Winterfeldt
Howard Raiffa
Affiliation:
Harvard Business School and the Kennedy School of Government, Harvard University
Ralph F. Miles Jr.
Affiliation:
California Institute of Technology
Detlof von Winterfeldt
Affiliation:
University of Southern California
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Summary

EDITORS' NOTE. In this chapter Howard Raiffa discusses the evolution of decision analysis and his personal involvement in its development. He describes the early days of Operations Research (OR) in the late 1940s with its approach to complex, strategic decision making. After reading John von Neumann and Oskar Morgenstern's Theory of Games and Economic Behavior (1947) and Abraham Wald's two books (1947, 1950), he became involved in statistical decision theory. A few years later, after reading Leonard Savage's The Foundations of Statistics (1954), he became convinced that classical statistics was not the right approach to analysis for decision making. In 1957, with R. Duncan Luce, he published Games and Decisions (1957), which presented the theory of von Neumann and Morgenstern to a wider audience. In 1961, with Robert Schlaifer, he published Applied Statistical Decision Theory (1961) to prove that “whatever the objectivists could do, we subjectivists could also do – only better.” In 1968, he published Decision Analysis (1968), the first book on the subject, and, in 1976, he published Decisions with Multiple Objectives (1976) with Ralph Keeney. These two books laid the foundation of decision analysis as it is practiced today. His interests then tuned to negotiation, resulting in the publication of The Art and Science of Negotiation (1982) and Negotiation Analysis (2002).

Type
Chapter
Information
Advances in Decision Analysis
From Foundations to Applications
 , pp. 57 - 70
Publisher: Cambridge University Press
Print publication year: 2007

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References

Neumann, J., and Morgenstern, O. (1944, 1947). Theory of games and economic behavior. Princeton, NJ: Princeton University Press. (I read parts of this epic book in 1949 working for my Office of Naval Research Contract on submarine detection. My first introduction to utility theory.)Google Scholar
Wald, A. (1947). Sequential analysis. New York: John Wiley. (A quasi-decision oriented book that I studied alone in 1948 as a student in statistics.)Google Scholar
Wald, A. (1950). Statistical decision theory. New York: McGraw-Hill. (The pioneering book that sets up the statistical decision paradigm. I read this book as soon as it appeared and gave a series of seminars on it for the statistical seminar at the University of Michigan.)Google Scholar
Raiffa, H. (1951). Arbitration schemes for generalized two-person games. Report M-720–1, R30 Engineering Research Institute, University of Michigan. (Unpublished report written for an ONR contract that became the basis for my doctoral dissertation.)
Chernoff, H. (1954). Rational selection of decision functions. Econometrica, 22. (Chernoff makes use of the sure-thing principle of Herman Rubin that I adopt as one of my basic axioms in my struggle with foundations of statistics. It helped convert me into the subjectivist school.)CrossRefGoogle Scholar
Savage, L. J. (1954). The foundations of statistics. New York: John Wiley. Revised 2nd edition in 1972. New York: Dover Publications. (The “bible” of the Bayesians.)Google Scholar
Luce, R. D., & Raiffa, H. (1957). Games and decisions: Introduction and critical survey. New York: John Wiley. Republished by Dover. (Reports on much of the unpublished results in my engineering report (1951). It compares the objectivist and subjectivist foundations of probability, but it doesn't openly endorse the Bayesian camp.)Google Scholar
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Schlaifer, R. O., and Raiffa, H. (1961). Applied statistical decision theory. Cambridge, MA: MIT Press. Republished in Wiley Classic Library Series (2000). (It introduces families of conjugate distribution that make it easy to go from prior distribution to posterior distributions and shows that Bayesianism can be made operational.)Google Scholar
Pratt, J. W., Raiffa, H., and Schlaifer, R. O. (1965). Introduction to statistical decision theory. Distributed by McGraw-Hill in mimeographic form. Published in finished form by MIT Press, New York, 1995. (A textbook version of ASDT. While widely adopted in mimeographic, unfinished form, it was not finished until 1995.)
Howard, R. A. (1966). Decision analysis: Applied decision theory. In Proceedings of the Fourth International Conference on Operational Research, New York: John Wiley. Reprinted in Howard & Matheson (1983). (First published paper referring to decision analysis and outlining its applicability.)Google Scholar
Raiffa, H. (1968). Decision Analysis: Introductory lectures on choices under uncertainty. Reading, MA: Addison Wesley. Reprinted in 1970. (Documents the paradigmatic shift from statistical decision theory to decision analysis.)Google Scholar
Raiffa, H. (1969). Preference for multi-attributed alternatives. RM-5868-DOT/RC. Santa Monica, CA: The RAND Corporation. (Earlier versions of this report were circulated in 1967 and influenced the early work by Keeney alone and with me.)Google Scholar
Raiffa, H. (1973). Analysis for decision making. An audiographic, self-instructional course. Ten volumes. Encyclopedia Britannica Educational Corp. Revised and republished by Learn, Inc. (1985).
Keeney, R. L., & Raiffa, H. (1976). Decisions with multiple objectives: Preferences and value tradeoffs. New York: John Wiley. Republished by Cambridge University Press, New York, 1993. (First serious attempt to develop analytical techniques for the value side of decision problems. Introduces ideas of preferential and utility independence.)Google Scholar
Nuclear Energy Policy Study. (1977). Nuclear power issues and choices. Pensacola, FL: Ballinger Publishing. (A model of a group policy exercise on an important, current, complex problem.)
Fisher, R., and Ury, W. (1981). Getting to yes: Negotiating agreement without giving in. New York: Houghton-Mifflin. Republished by Penguin Books, New York, 1983. (Helps establish the field of negotiations as a growth industry. Sold close to 4 million copies. Emphasis is on negotiating joint gains.)Google Scholar
Raiffa, H. (1982). The art and science of negotiation. Cambridge, MA: Harvard University Press. (Early attempt to show how analysis can be an integral part of the theory and practice of negotiations.)Google Scholar
The Committee on Risk and Decision Making (CORADM). (1982). Report for the National Research Council of the National Academy of Sciences. (Unpublished report on the status of societal risk analysis that failed to pass peer review. Chair: Howard Raiffa.)
Howard, R. A., and Matheson, J. (Eds.). (1983). The principles and applications of decision analysis. Vol. I: General collection. Vol. II: Professional collection. Menlo Park, CA: Strategic Decisions Group. (Documents the impressive evolution of decision analysis as it developed at Stanford by Ronald Howard and his student disciples.Google Scholar
Keeney, R. L. (1992). Value-Focused thinking: A path to creative decisionmaking. Cambridge, MA: Harvard University Press. (Stresses the importance of objectives and values in analyzing problems of choice. I think of it as an often neglected and much undeveloped part of decision analysis. Ralph Keeney thinks of it as a new specialty of its own that is separate from decision analysis.)Google Scholar
Lavalle, I. H. (1996). The art and science of Howard Raiffa. In Zeckhauser, R. J., Keeney, R. L., and Sebenius, J. K. (Eds.). Wise choices: Decisions, games, and negotiations. Cambridge, MA: Harvard University Press.Google Scholar
Zeckhauser, R. J., Keeney, R. L., and Sebenius, J. K. (Eds.). (1996). Wise choices: Decisions, games, and negotiations. Boston, MA: Harvard University Press. (Festschrift in honor of Howard Raiffa.)Google Scholar
Hammond, John S., Keeney, R. L., and Raiffa, H. (1999). Smart Choices: A Practical Guide to Making Better Decisions. Boston, MA: Harvard Business School Press. (An attempt to show the universality of decision analysis, broadly interpreted to include value analysis. An emphasis on problem identification and formation. Written for a broad audience. What should have been included in Raiffa (1968) but wasn't.)Google Scholar
Raiffa, H. (2002). Negotiation Analysis: The Science and Art of Collaborative Decision Making. Cambridge, MA: Harvard University Press, 2002. (With J. Richardson and D. Metcalfe) (A revision of Raiffa (1982) stressing the analysis of deals in contrast to disputes. It synthesizes the use of individual decision making (as in decision analysis), interactive decision making (as in game theory), and behavioral decision making in the analysis of negotiations (broadly interpreted).)Google Scholar

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