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Durham University

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Publication details for Matthias Troffaes

Huntley, Nathan & Troffaes, Matthias C. M. (2012). Normal Form Backward Induction for Decision Trees with Coherent Lower Previsions. Annals of Operations Research 195(1): 111-134.

Author(s) from Durham


We examine normal form solutions of decision trees under typical choice functions induced by lower previsions. For large trees, finding such solutions is hard as very many strategies must be considered. In an earlier paper, we extended backward induction to arbitrary choice functions, yielding far more efficient solutions, and we identified simple necessary and sufficient conditions for this to work. In this paper, we show that backward induction works for maximality and E-admissibility, but not for interval dominance and Gamma-maximin. We also show that, in some situations, a computationally cheap approximation of a choice function can be used, even if the approximation violates the conditions for backward induction; for instance, interval dominance with backward induction will yield at least all maximal normal form solutions.