*Learning decision analysis (DA) is boring and dry.*

It doesn't have to be if we put a fun spin on it. DA takes a limited set of options, applies values, costs, and probabilities to each, and makes a decision based on highest "expected value".

Figuring out which widget a company should manufacture is mind numbing. Instead, let's decide if we should jump the fence for the next concert we go to!

**What's a live concert worth to you?**

Your favourite band is playing a gig, but $150 tickets are too expensive. You'd be willing to pay $100. So you have 3 choices:

**Watch live on TV**. This has a 100% chance of not going, $0 cost, but 10% of the fun.**Buy a ticket**. 100% chance of having a great time and spending $150.**Jump the fence**. 80% chance you see the concert, 20% chance you get caught and fined $300.

Decision Analysis tells us to evaluate each option's Expected Value (EV) with this formula:

`EV = [Probability OutcomeA x Expected Payoff) + (Probability OutcomeB x Expected Payoff)`

Remember, Expected Payoff is the value of the concert to you ($100 live or $10 on TV) less any costs.

**Calculate Expected Values**

`Skipping EV: [100% x ($10-$0)] = $10`

`Paying EV: [100% x ($100-$150)] = -$50`

`Fence Jump EV: [80% x $100] + [20% x -$300] = $80 - $60 = $20`

**Jump the Fence**

Decided, you should jump the fence because it has the highest expected value outcome of all the options.

**Moral of the Story**

Yay, now you know how to do Decision Analysis.

BUT not everything can be expressed in dollars and cents. Morals matter too.

I'll make this decision easy for you - buy the ticket!

You'll feel good and support artists, and I promise you actually undervalued the fun of being there live!