Analyzing a Class of Investment Decision in New Ventures : a Cbr Approach

An application of case-based reasoning is proposed to build an influence diagram for identifying successful new ventures. The decision to invest in new ventures is characterized by incomplete information and uncertainty, where some measures of firm performance are quantitative, while some others are substituted by qualitative indicators. Influence diagrams are used as a model for representing investment decision problems based on incomplete and uncertain information from a variety of sources. The building of influence diagrams needs much time and efforts and the resulting model such as a decision model is applicable to only one specific problem. However, some prior knowledge from the experience to build decision model can be utilized to resolve other similar decision problems. The basic idea of case-based reasoning is that humans reuse the problem solving experience to solve a new decision. In this paper, we suggest a case-based reasoning approach to build an influence diagram for the class of investment decision problems. This is composed of a retrieval procedure and an adaptation procedure. The retrieval procedure is carried out two phase, business item selection and case selection. An adaptation procedure is based on a decision-analytic knowledge and decision participants’ knowledge. Each step of procedure is explained step by step, and it is applied to the investment decision problem in new ventures.