Smart Choices: Visual Decision Support

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Smart Choices Visual Decision Support

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THROW 1 THROW 2 THROW 3 Play Darts? $50 -$3 -$2 -$1 $0 $10.75 $23.50 $4.88 Hit 50% Miss 50% yes no Hit 50% Hit 50% Miss 50% Miss 50% .50 x $50 = $25 .50 x -$3 = $1.50 .50 x $23.50 = $11.75 .50 x -$2 = -$1 .50 x -$1 = -$0.50 .50 x $10.75 = $5.38 (.50 x $50) + (.50 x -$3) =

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70% 65% 60% 55% 50% 45% 40% 35% 30% 30% 35% 40% 45% 50% 55% 60% 65% 70% 50% 50% Throw 1 Play Darts? Play Darts? HIT MISS

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Throw 1 Throw 2 Throw 3 Play Darts? HIT MISS

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Throw 1 Throw 2 Throw 3 Play Darts? HIT MISS HIT MISS

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Throw 1 Throw 2 Throw 3 Play Darts? HIT MISS HIT MISS HIT MISS

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HIT MISS Throw 1 Throw 2 Throw 3 Play Darts? HIT HIT MISS MISS

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HIT MISS HIT MISS Throw 1 Throw 2 Throw 3 Play Darts? HIT MISS HIT

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HIT MISS HIT MISS HIT MISS Throw 1 Throw 2 Throw 3 Play Darts? HIT

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Play Darts? Throw 1 Throw 2 Throw 3 Play Darts? HIT MISS HIT MISS HIT MISS

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Throw 1 Throw 2 Throw 3

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vs. Which Game to Play? Cost per throw: $1 Hit probability: 25% Payoff for 3 hits: $50 Cost per throw: $1 Hit probability: 10% Payoff for 3 hits: $1000 Darts Ring Toss

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Throw 1 Throw 2 Throw 3 Play Darts? HIT HIT MISS MISS MISS Play Ring Toss? MISS HIT

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Using Risk Boxes In Business

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Slow .8 Fast .2 Slow .8 Fast .2 Slow .8 Fast .2 Slow .8 Fast .2 Slow .8 Fast .2 Fast .2 Slow .8 Pass .8 Pass .9 Pass .5 Proof of Concept Proof of Concept Proof of Concept Fund? Detailed Design Detailed Design Detailed Design Manufacture Manufacture Manufacture Sales Sales Sales Competitor Competitor Competitor Competitor Competitor Competitor Pass .8 Pass .8 Pass .9 Pass .9 Pass .5 Pass .9 High .2 Low .8 High .2 Low .8 High .2 Low .8 200 1000 50 200 200 1000 50 200 200 1000 50 200 -5 -25 -125 -15 -30 -130 -15 -30 -130 280 80 840 170 840 170 773 324 289 258 773 683 612 298 120 71 52 40 Design A Design C Design B

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Design A Fail Pass Pass Pass Fail High Low Fast Fast Slow Fail Competitor Sales Manufacture Detailed Design Proof of Concept Product Design B Design C Pass Fail Pass Pass High Pass Fail Pass Fail Pass Fail High Fast Slow Fast Slow

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70% 65% 60% 55% 50% 45% 40% 35% 30% 30% 35% 40% 45% 50% 55% 60% 65% 70% 50% 50% Throw 1 Play Darts? Play Darts? HIT MISS Less mental processing Risk Blocks Rapid risk understanding No math needed to understand

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70% 65% 60% 55% 50% 45% 40% 35% 30% 30% 35% 40% 45% 50% 55% 60% 65% 70% 50% 50% Throw 1 Play Darts? Play Darts? HIT MISS Less mental processing Risk Blocks Rapid risk understanding No math needed to understand