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Continuous Trees and NEVADA Simulation

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  • David J. Bryg

Abstract

This paper introduces an improved technique for modeling risk and decision problems that have continuous random variables and probabilistic dependence. Variables are modeled with mixtures of four-parameter random variables, called "continuous trees." Functions of random variables are calculated using gaussian quadrature in a manner called "NEVADA simulation" ( N um E rical integration of V ariance A nd probabilistic D ependence A nalyzer). This technique is compared with traditional decision-tree modeling in terms of analytic technique, solution-time complexity, and accuracy. NEVADA simulation takes advantage of the proba bilistic independence in a decision problem while allowing for probabilistic dependence to achieve polynomial computational-time complexity for many decision problems. It improves on the accuracy of traditional decision trees by employing larger approximations than tra ditional decision analysis. It improves on traditional decision analysis by modeling continuous variables with continuous, rather than discrete, distributions. A Bayesian analysis using a mixed discrete-continuous probability distribution for cigarette smoking rate is presented. Key words : continuous trees; NEVADA simulation; decision analysis; modeling. (Med Decis Making 1995;15:318-332)

Suggested Citation

  • David J. Bryg, 1995. "Continuous Trees and NEVADA Simulation," Medical Decision Making, , vol. 15(4), pages 318-332, October.
    • Handle: RePEc:sae:medema:v:15:y:1995:i:4:p:318-332
    DOI: 10.1177/0272989X9501500403
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    References listed on IDEAS

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    1. Benjamin Djulbegovic, 1993. "An Estimation of Life Expectancy: The Method Is a Message," Medical Decision Making, , vol. 13(3), pages 245-246, August.
    2. Ross D. Shachter & C. Robert Kenley, 1989. "Gaussian Influence Diagrams," Management Science, INFORMS, vol. 35(5), pages 527-550, May.
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