In the May 2003 article, "How to Take Risk in a Time of Anxiety," senior writer Leigh Buchanan points out four ways business owners can make better decisions in the face of uncertainty. One method involves studying alternative outcomes using decisions trees and Monte Carlo simulation. Inc.com interviewed Sam Savage, a consulting professor in the Department of Management Science and Engineering at Stanford for more details on the topics. You'll find interactive examples of both methods of decision-making below:
Decision Making with Decision Trees
Decision-making doesn't have to be done in the dark. Analyzing the outcomes of a few alternative actions using a decision tree can help you determine if you've made the most favorable decision.
Projecting Outcomes with Probability Modeling
Computers and probability modeling software can play a pivotal role in helping business owners better project the outcome of their decisions.