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SCENARIOS

Explore different strategies to discretize parameters and assign probabilities in scenarios. Pick values and use cumulative curves to determine outcomes. Consider parameter probability distribution in various options. Example provided.

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SCENARIOS

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  1. P(q) q1 q2 q3 q4 q5 q SCENARIOS Discretize it. Option 1: pick values of probabilities. For example, for 3 values, pick 25%, 50% and 25% probability and find the values. Use the cumulative curve to locate the numbers. Consider each parameter probability distribution.

  2. P(q) q1 q2 q3 q4 q5 q SCENARIOS Option 2: pick equal probability values and find parameter values. For example, for 3 values, pick 33% and locate the points. Use the cumulative curve to do this.

  3. P(q) q1 q2 q3 q4 q5 q SCENARIOS Option 3: pick values (equidistantly or randomly) and find the probability that corresponds to them from the area they “span”. Use the cumulative curve for this.

  4. SCENARIOS EXAMPLE: 2 parameters (θ1, θ2). If each parameter is discretized in three instances (θi,low, 25%, θi,avg 50%, θi,hig 25%) Each scenario is constructed by picking one realization for each parameter.

  5. SCENARIOS Scenario Probability Scenario Probability θ1,low, θ2,low 6.25% θ1,hig, θ2,low 6.25% θ1,low, θ2,avg 12.5% θ1,hig, θ2,avg 12.5% θ1,low, θ2,hig 6.25% θ1,hig, θ2,hig 6.25% θ1,avg, θ2,low 12.5% θ1,avg, θ2,avg 25.0% SUM OF ALL θ1,avg, θ2,hig 12.5% PROBABILITIES=1

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