PREFERENCES, AND FINANCIAL PLANNING

We discuss knowledge-based decision support for a complex decision problem in a changing environment. The problems involves a sequence of decisions and requires dynamic modifications of the representation. Decision-making is modelled by means of the NEGOPLAN system. NEGOPLAN is based on a two-level rule formalism with logical variables and unification. The existence of multiple solutions of the problem is assumed. This allows us to introduce the concept of flexibility and a mechanism of preferences. Flexibility makes it possible to determine decisions which are resistant to unforeseen changes of the environment. Preferences facilitate the search for flexible decision characteristics. NEGOPLAN can be applied in many types of decision problems. Here we consider the modelling of a class of financial decisions. We describe a theoretical model of capital budgeting, and briefly present an implementation of this model in NEGOPLAN. Our work shows how preferences and flexibility can be mutually linked in the knowledge-rich modelling of financial management problems.

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