Interactive Visualization for Risk Preference Sensitivity Analysis
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Solution Overview
Problem
Existing data visualization systems for utility functions and risk preferences are not sufficiently informative or intuitive, often introducing biases that distort the decision maker's true preferences.
Innovation Solution
A novel visualization tool that portrays the certain equivalent for probability distributions and allows users to manipulate representations, altering the underlying utility function, enabling interactive analysis and feedback to ensure accurate risk preference representation.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Measurement precision
If traditional risk preference elicitation methods are used, then the decision making formalism can be implemented, but biases are introduced that distort the decision maker's true preferences
Solution Approach 1:
The patent introduces a visualization tool as an intermediary between the decision maker and the utility function elicitation process. This tool displays the certain equivalent for probability distributions and allows the decision maker to manipulate the representation, thereby reducing direct questioning biases and enabling more accurate expression of true preferences through visual interaction rather than direct verbal responses
2Ease of operation
If the visualization tool portrays the certain equivalent for probability distributions, then the decision maker can explore and understand risk preferences, but the system complexity increases
Solution Approach 1:
The patent replaces traditional mechanical questioning methods with a visual computation system. The visualization tool automatically computes and displays the certain equivalent based on the utility function and probability distribution, substituting complex mathematical calculations with an intuitive visual representation that the decision maker can interact with without needing to understand the underlying complexity
Data Source
AI summary
A system, computer program product, and method is described to provide a visualization tool which portrays the certain equivalent for one or more hypothetical (i.e. synthetic) or real probability distributions p(m), and optionally allows the user to manipulate that representation, resulting in associated changes to the underlying utility function u(m). In a first example, the risk preference visualization tool allows one to explore how the certain equivalent depends upon the probability distribution p(m), for a fixed utility function u(m). In a second example, the risk preference visualization tool allows one to explore how the certain equivalent depends upon the utility function u(m), assuming one or more fixed probability distributions p1(m), p2 (m), etc. In a third example, the decision maker can provide feedback through the visualization tool that would cause their utility function to be modified.