A Measure of Decision Flexibility

TL;DR

This paper introduces a decision-analytical method to measure and compare the flexibility of decision situations, accounting for unanticipated uncertainties and guiding the development of more adaptable plans.

Contribution

It presents a simple, consistent approach to quantify decision flexibility that incorporates unmodeled uncertainties and aids in identifying more flexible alternatives.

Findings

The approach aligns with various flexibility concepts like robustness and adaptiveness.

It enables comparison of different decision plans based on flexibility.

It helps in discovering more flexible decision alternatives.

Abstract

We propose a decision-analytical approach to comparing the flexibility of decision situations from the perspective of a decision-maker who exhibits constant risk-aversion over a monetary value model. Our approach is simple yet seems to be consistent with a variety of flexibility concepts, including robust and adaptive alternatives. We try to compensate within the model for uncertainty that was not anticipated or not modeled. This approach not only allows one to compare the flexibility of plans, but also guides the search for new, more flexible alternatives.