Applies to: PrecisionTree 5.x and Up

Some branches' values change to #VALUE using a utility function. What’s going on?

 

Answer:

This usually happens because a branch value causes a forbidden operation in your utility function or its inverse.

For example, with the exponential utility (U = 1 - e^{-$/R})

• very large branch values make (U) indistinguishable from 1, so
  • computing the Certainty Equivalent (( $ = -R \ln(1-U) )) tries to take (\ln(0)), resulting in #VALUE. 
• With the logarithmic utility (U = \ln($ + R)), branch values ≤ −R are invalid.

Solution:

To fix, adjust the branch values or the risk tolerance parameter (R). For custom utility functions, ensure no inputs cause undefined operations. Display Expected Utility to locate problematic nodes.

 

 

Related Article:

Utility Functions

Attachments:
KB1382_UtilityError.xlsx