by Ronald A. Howard

This is the publication that started it all. In this paper, Professor Ron Howard of Stanford and SDG coined the term “decision analysis” to name the new field he was developing. This paper lays out an early version of the decision analysis cycle, including deterministic, probabilistic, and post-mortem phases. The post-mortem phase included computing the value of information, today known as the appraisal phase. Prof. Howard also discusses modeling and the encoding of information and risk preference. Importantly, Prof. Howard details the principle responsibilities of decision analysts. Finally, he suggests a rule-of-thumb to specify how much one should spend on decision analysis: spend at least 1% of the resources to be allocated ensuring that a good decision is made about their allocation. Thus, a $100 million decision would call for a $1 million decision analysis.

Published 1966 in Proceedings of the Fourth International Conference on Operational Research, Wiley-Interscience.