We have attempted to make UEP intuitive. Hovering the mouse pointer above entry titles, radio buttons, entry fields, and other areas for brief descriptions. Click the Symbols link for a quick reference to key variables and parameters.
Login, if you're not already, and click the UEP User Guide for the pdf document.
"Decision Analysis Overview"
"Utility Function for Risk Policy"
Downloadable PDF Files
"Risk Policy as a Utility Function" (utility.pdf)
"Using Utility Elicitation Program" (uep.pdf)
Here are the symbols in UEP and brief definitions:
Symbol or Term
Probability of success. Or, probability of the better outcome.
Probability of success at BreakEven (where EMV = 0).
Certain equivalent. This is the cash-in-hand value of a risk.
Fractional ownership of a large project or risky asset. The optimal Share gives you the highest CE.
Net Present Value of the Success (or best or bad) outcome.
Net Present Value of the Failure (or good or worst) outcome.
Discounted Return on Investment. DROI = EMV / |-NPVf|. This is a popular ranking criterion if limited capital.
P(profit with 10)
The probability of NPV>0 with a portfolio of 10 identical, independent projects like this one. Alternate symbol: "Ps 10X".
r or RTC
Risk Tolerance Coefficient (RTC or r). This the scaling factor for risk policy. Helping you assess r is the purpose and outcome of EUP. Higher r means you are more risk-tolerant.
NPVf < CE ≤ EMV As r → ∞, CE → EMV As r → 0, CE → NPVf NPVf is the failure or worst outcome NPV
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