The George Boole Foundation
The Decision Analysis Initiative



What is an...

Accumulog

An Accumulog is a record of accumulated experience or knowledge. It is a software device designed to help people understand why they identify and recognise cross relationships between things they have learned and experienced during their lifetime.

The Accumulog is therefore a record of personal evolution.

The concept and purpose of an Accumulog was proposed in 1985 as a part of the DELTA Programme preparation at the Information Technology and Telecommunications Task Force. It is notable that this online device was identified and reviewed a decade before the World Wide Web came into existence.

Decision Analysis Initiative 2010-2015
George Boole Foundation
Online demonstrations

An important part of the Decision Analysis Initiative (DAI) is the setting up and running of online demonstrations of decision analysis applications. The administration of this is being handled by DAI 2015-2020.

Our programme is ambitious and we are aware that live online demonstrations take time to produce and debug. As a non-profit organization we are carrying out a development strategy to build prototypes and demos that will provide the foundaiton for online services sold through commericial organizations on a profit share basis. The contributions received by DAI and GBF will be income which will be reinvested in the efforts to improve decision analysis techniques.

One of our sponsored sites provides orientation on our preferred baseline application development approach using server side ECMAScript (JavaSctript ECMA & ISO standards) and the link below provides a basic guide to server side ecmascripting. This site was established in 2010. Current status: Active:

www.power-ecmascripting.com

The commercial development of online real time audit system is being advanced by a collaboration between SEEL-Systems Engineering Economic Lab and Navatec.com. Current status: Active:

www.navatec.com

75% of the world's population employed in the agricultural sector and mainly developing countries. There is a need for systems to provide effective management of policy and development projects. Agroinfosys.eu deals with online agricultural information systems in developing, transition economies and the EU. This site was established in 2011. Current status: Being updated:

www.agroinfosys.eu

The description of reality in the form of data in a database requires a combination of object orientated structures and locational state theory. This site is dedicated to an advanced database development (Plasma DB) where the GBF is mainly interested in functional standards to pass on to the Open Quality Standards Initiativee so as to ensure an early adoption in the server side ECMAScript environment. This site was established in 2011. Navatec.com and SEEL are deploying Plansma DB in the Project Cycle & Portfolio Management system currently under development. Current status: Passing through benchtesst and prototyping stages:

www.plasma.systems

www.locationalstate.org

Demos will be supported by additional information in the form of help systems, didactic material, audio-visuals, briefs and other relevant documentation. The initial demonstrations will present a graded sequence covering foundation principles of performance objectives at macroeconomic and microeconomic levels as well as successful applications illustrating aspects of functionality.

Economic performance, RTA & applications

Demonstrations include core decision analysis models used to explain the objectives and methods applied according to the knowledge domain. These are broadly classified into the following categories:

  • Economic performance
  • Real Time Audit
  • Applications
These categories represent a logical cascade connected by determinant relationships between, for example, the objectives of macroeconomic policy (economic performance) the information required by managers to maximise their performance (real time audit) and how resources are managed to bring about a mutual enhancement of macroeconomic and microeconomic performance at the application level. General details on these areas of analysis can be found under the appropriate menu sections above. More detailed analysis will be presented in the context of each demonstration.

Functions are not enough
The financial crisis

"There is little doubt that the financial crisis emerging during 2007-2009 was a combined and direct result of inadequate attention to appropriate decision analysis in the realms of commercial financial risk assessment at the corporate level. There was also insufficient attention given to the identification of appropriate economic policy options at the national and international levels.

It is clear that there is an urgent need for better decision analysis at the micro and macroeconomics levels
."

Fiscal Autonomy Report - UK, SEEL, 2009


The recent upsets in the world of finance (see box on right) resulted in a recognition that decision analysis and the assessment of risk are not simply a matter of applying a sophisticated mathematical function to "similar" circumstances.
Case study


A model that attempted to explain the relationship between options and hedging was developed by Fischer Black and Myron Scholes in a paper published in 1973 entitled,"The Pricing of Options and Corporate Liabilities."

This was a partial differential equation that estimates the price of an option over time. The objective of the "model" was to perfect option hedging by buying and selling the underlying asset at the right time and price so as to sustain a position of "risk elimination". This basic "model" has been used since the 1970s to orientate the massive rise in derivative trading. Although this failed, giving rise to severe losses, this "model" is still used today by investment banks.

An analytical model of the Black & Scholes pricing formula has been built in DScript and this enables a more detailed analysis of the sensitivity of this model to shifts in intrinsic values of underlying derivative components. A reduced image of the Black & Scholes; component of this model is provided below. We provide this analysis in more detail in the DAI demos.


Black & Scholes model built in DecisionScript (DScript)
Vanguard Software Corporation
SEEL-Systems Engineering Economic Lab
Indeed one of the fundamentals of decision analysis is that no circumstance is completely identical to another. The effective application of statistical routines and mathematical functions need to be defined in terms of deductive and inferential principles that deal with complexity (highly variable circumstances). This provides a better foundation for improving the relevance of precise logical relationships and the probabilities of the critical events affecting outcomes of decisions. Because comprehensive decision analysis was not applied to the application of financial derivative pricing, the intrinsic value of financial assets were incorrectly assessed leading to severe losses in investment portfolios. (see box on right)

An objective approach can only be sustained if the reality of constant change is recognised in physical, technical, economic & financial variables.

In decision analysis, an "average" reference value, based upon previous events, is of little direct relevance to a current decision affecting future outcomes. Such changing surrounding circumstances causes each decision analysis to be unique, each is one of a kind, perhaps similar to - but never identical with - previous situations. This has always been recognised since the emergence of decision analysis as a new discipline in the 1960s. Early work by Matheson & Howard1 explained that decision analysis seeks to apply logical, mathematical, and scientific procedures to the decision problems that are characterised by uniqueness. The uniqueness is accommodated in the decision analysis model (see "Decision analysis").

Besides this need for adaptability in decision analysis models, the other typical characteristics include the importance of decisions which often place a significant portion of an organization's resources in question. Uncertainty predominates with many of the key factors that must be taken into account being imperfectly known. Decisions can have long run implications, an enterprise can be forced to live with the results of the situation for many years, perhaps even beyond the lifearial of the individuals involved. Decisions usually need to satisfy complex preferences requiring a transparent incorporation of the decision-maker's preferences about time and risk.

The recent experience in macroeconomic policy and the growth in financialization since the 1970s is a clear demonstration that adequate decision analysis principles have not been applied because there was an obvious de-coupling of the real economy (economic and social constituencies) from the activities of large financial intermediaries. This applies as much to deficient macroeconomic econometric models used in policy making as it does to the division of decision-maker preferences between financial intermediaries and their clients. In the wake of the financial crisis it is evident that there are many cases where client preferences and national economic interests were largely ignored as a result of poor management or fraud. In both circumstances, adequate decision analysis was lacking.

Decision analysis can provide a practical computational implementation of a decision analysis model by configuring the relationships between analytical components to reflect the decision-making environment. This helps achieve a more objective and flexible mathematical modelling of appropriate decisions and a more realistic quantitative evaluation of the various courses of action.




1  Matheson J. E. & Howard R. A., "An Introduction to Decision Analysis", Stanford Research Institute, 1968, cited in McNeill H. W., "The State-of-the-Art & Future of Decision Analysis", Boolean Society, Brief 001, January, 2010.

This site is sponsored by SEEL Systems Engineering Economics Labs http://www.seel-telesis.com