influence diagram



Graphical aid to decision making under uncertainty, it depicts what is known or unknown at the time of making a choice, and the degree of dependence or independence (influence) of each variable on other variables and choices. It represents the cause-and-effect (causal) relationships of a phenomenon or situation in a non-ambiguous manner, and helps in a shared understanding of the key issues. Influence diagram for a marketing plan, for example, may show how the marketing budget and proposed price would affect a product's market share, total costs and revenue, and net income.
Whereas a decision tree shows more details of possible paths, an influence diagram shows dependencies among variables more clearly. Its invention is attributed to Massachusetts Institute Of Technology (MIT) professor Jay W. Forrester (born 1918 ), inventor of ferrite memory-core and system dynamics methodology. Also called decision diagram.

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