Stochastic sensitivity analysis

Stochastic sensitivity analysis is an important activity during both the probabilistic analysis and basis appraisal phases of the decision analysis cycle. Stochastic sensitivity analysis is the generic name for a collection of attention-focusing and basis-validation methods. One of these methods, probabilistic sensitivity, ranks the elements of the probabilistic decision basis according to how much the value of the objective function and the optimal decision change as these elements vary through their range of possible alternatives (decision variables) and outcomes (uncertain variables). Other forms of stochastic sensitivity analysis include constructing and analysing profit lotteries and carrying out risk sensitivity, value-of-information, and value-of-control calculations.

See also: objective function, probabilistic basis and stochastic.