Chapter 1Introduction to Engineering Decision Making

1.1 Introduction

Why should engineers study decision making? What is engineering decision making?

People have always made decisions, but analyzing decision-making processes and developing better decision-making methods are more recent activities. Our ability to analyze decisions has increased as mathematics, especially the theory of probability, has developed. In the 1700s, Daniel Bernoulli analyzed risky decisions and described how the relative values of alternatives depend on the preferences of the decision maker (Bernoulli, 1954). Ramsey (1964) developed a theory for decision making based on probability theory and utility. von Neumann and Morgenstern (1944) formalized the theory of expected utility and the analysis of multiplayer games, which is now known as game theory. Early works ...

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