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This electronic representation of RAND intellectual property is provided for non- commercial use only. Permission is required from RAND to reproduce, or reuse in another form, any of our research documents for commercial use. This product is part of the RAND Corporation technical report series. Reports may include research findings on a specific topic that is limited in scope; present discus- sions of the methodology employed in research; provide literature reviews, survey instruments, modeling exercises, guidelines for practitioners and research profes- sionals, and supporting documentation; or deliver preliminary findings. All RAND reports undergo rigorous peer review to ensure that they meet high standards for re- search quality and objectivity. Theory and Methods for Supporting High Level Military Decisionmaking Paul K. Davis, James P. Kahan Prepared for the United States Air Force Approved for public release; distribution unlimited The research described in this report was sponsored by the United States Air Force under Contracts F49642-01-C-0003 and FA7014-06-C-0001. Further information may be obtained from the Strategic Planning Division, Directorate of Plans, Hq USAF. Library of Congress Cataloging-in-Publication Data Davis, Paul K., 1943- Theory and methods for supporting high level military decisionmaking / Paul K. Davis, James P. Kahan. p. cm. Includes bibliographical references. ISBN 978-0-8330-4039-8 (pbk. : alk. paper) 1. Command of troops. 2. Decision making—Methodology. 3. Military planning—Decision making. I. Kahan, James P. II. Title. UB210.D388 2007 355.6'830973—dc22 2007012304 The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. R® is a registered trademark. © Copyright 2007 RAND Corporation All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from RAND. Published 2007 by the RAND Corporation 1776 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138 1200 South Hayes Street, Arlington, VA 22202-5050 4570 Fifth Avenue, Suite 600, Pittsburgh, PA 15213-2665 RAND URL: http://www.rand.org/ To order RAND documents or to obtain additional information, contact Distribution Services: Telephone: (310) 451-7002; Fax: (310) 451-6915; Email: [email protected] Preface This technical report joins basic concepts in decisionmaking theory with practical meth- ods and tools for useful high-level decision support, such as is needed by a Joint Force Air Component Commander or, in peacetime, an Air Force Chief of Staff doing strategic plan- ning and related resource allocation. The research described here was sponsored primarily by the Air Force Research Laboratory (AFRL) and conducted within the Aerospace Force Development Program of RAND Project AIR FORCE as part of a fiscal year 2005–2006 study, “Capabilities Analysis for Decision Support.” Some of the material covered also ben- efited from cooperation with ongoing RAND Corporation projects sponsored by the Office of the Secretary of Defense. This report builds on prior research on decision support, Implications of Modern Decision Science for Military Decision-Support Systems, by Paul K. Davis, Jonathan Kulick, and Michael Egner, MG-360-AF, 2005. RAND Project AIR FORCE RAND Project AIR FORCE (PAF), a division of the RAND Corporation, is the U.S. Air Force’s federally funded research and development center for studies and analyses. PAF pro- vides the Air Force with independent analyses of policy alternatives affecting the development, employment, combat readiness, and support of current and future aerospace forces. Research is conducted in four programs: Aerospace Force Development; Manpower, Personnel, and Training; Resource Management; and Strategy and Doctrine. Additional information about PAF is available on our Web site at http://www.rand. org/paf. iii Contents Preface ........................................................................................................... iii Figures ........................................................................................................... ix Tables ............................................................................................................ xi Summary .......................................................................................................xiii Acknowledgments ........................................................................................... xvii Acronyms....................................................................................................... xix CHAPTER ONE Introduction ..................................................................................................... 1 Objectives ......................................................................................................... 1 Effects-Based Operations and the Commander’s Predictive Environment ............................... 2 Outline of This Report .......................................................................................... 3 CHAPTER TWO Uncertainty, Risk, and Choice ............................................................................... 5 Initial Comments ................................................................................................ 5 Uncertainty ....................................................................................................... 5 Risk ................................................................................................................ 7 Defense Planning .............................................................................................. 7 Operations Planning .......................................................................................... 8 Choice ............................................................................................................. 8 Putting It Together: What Decision Support Is Needed? ................................................... 9 CHAPTER THREE Reconciling Different Approaches to Decisionmaking ................................................11 Background ......................................................................................................11 Working with Both Rational-Analytic and Naturalistic Styles ...........................................12 Techniques for Creative Critical Review .....................................................................15 v vi Theory and Methods for Supporting High-Level Military Decisionmaking How Much Uncertainty Analysis Is Enough? ...............................................................16 A Simple Framework .........................................................................................16 Weighting the Factors ........................................................................................17 Assessing Confidence Level..................................................................................19 CHAPTER FOUR A Framework for High-Level Decision Support .........................................................21 “Serious” Options, Not Stereotypes ..........................................................................21 Portfolio-Management Tools ................................................................................. 22 General Requirements....................................................................................... 22 Treatment of Risk Within a Portfolio-Management Decision-Support System...................... 24 Places to Reflect Risk in a Portfolio-Management Decision-Support System .........................25 Lowest-Level Explanations...................................................................................25 The Mathematics and Logic of Aggregation...............................................................25 Cost-Benefit Information and Chunky Marginal Analysis ............................................. 26 Exploratory Analysis......................................................................................... 26 CHAPTER FIVE Examples of New Tools .......................................................................................29 Portfolio Analysis for a Commander .........................................................................29 Introduction ...................................................................................................29