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# Strategy evaluation

Strategy evaluation uses decision science to evaluate the strategies in your plan.

When you run an evaluation, a blue evaluation figure will appear above the strategies in your plan.

You can also generate a detailed evaluation report from the evaluation menu.

Note: During evaluation, plan editing features are limited. To resume editing your plan click the "Exit evaluation" button.

## The science behind strategy evaluation

Strategy evaluation is based on the standard economic model of rational decision making, which when applied to risky decisions is known as VNM utility theory.

VNM utility theory provides a robust scientific basis for identifying the relative values a rational decision maker will ascribe to alternative risky strategies.

Litigaze uses VNM utility theory to evaluate the strategies in a plan by taking into account all the user inputted values of the plan, including cards, results, probabilities and risk profiles.

To be considered "rational" under VNM utility theory, a decision maker needs to accept 4 basic assumptions. So long as a decision maker accepts these assumptions, their preferences can be proven to align with VNM utility theory, and therefore Litigaze's strategy evaluation.

The 4 assumptions of VNM utility theory involve basic comparisons between hypothetical chance cards A, B and C as follows.

### 1. Completeness assumption

It is assumed that a decision maker either prefers A over B, prefers B over A, or is indifferent between A and B.

This assumption will hold if a decision maker is able to state a definite preference when comparing any 2 chance cards.

### 2. Transitivity assumption

If a decision maker prefers A over B, and B over C, it is assumed that the decision maker will prefer A over C.

This assumption will hold if a decision maker has mutually-consistent preferences for any 3 chance cards.

### 3. Independence assumption

If a decision maker prefers A over B, it is assumed the decision maker will prefer a chance between A and C, over the same chance between B and C.

This assumption will hold if a decision maker's preference between 2 chance cards, A and B, is the same as their preference between equals chances of, on the one hand, A and a third chance card and, on the other, B and the same third chance card.

### 4. Continuity assumption

If a decision maker ranks A, B, C in that order from most to least preferred, it is assumed the decision maker will be willing to substitute B for a chance between getting either A or C so long as the chance of getting A high enough.

This assumption will hold if a decision maker is able to select a risk profile in Litigaze.