A Perspective on Modeling in Decision Analysis

We use mathematical modeling in decision analysis to help us obtain a profit lottery that is “better” than the one we can assess directly. The “goodness” of the profit lottery is defined by the concept of authenticity of probabilities. The role of modeling is to simplify our assessment task through decomposition of the profit lottery. However, budgetary constraints force us to make approximations in the modeling process and thereby force us to misstate the profit lottery. When dealing with our dissatisfactions about the modeling in a decision analysis, we regard models as subjective expressions of our uncertainty rather than as objective descriptions of the real-world.