Hi Karthik, Thanks! The selection of distributions is really important here. To be clear, the demonstration section is using normal distibutions for convenience and ease of understanding.
The actual implemented PSA, however, has no such restriction. In the mini PSA exercise, you can see that the resulting uncertainty distributions are not distributed normally, and are fat tailed as you say. In the full PSA, if implemented, I would strongly suspect that that resulting distributions will mostly be very fat tailed, and highly skewed rightward. The decision rules I suggested specifically combat this due to the decision rules not being sensitive to how heavy the right tail is, but very sensitive to the left tail.
I will see if I can add a note to clarify this, thanks!
Hi Karthik, Thanks! The selection of distributions is really important here. To be clear, the demonstration section is using normal distibutions for convenience and ease of understanding.
The actual implemented PSA, however, has no such restriction. In the mini PSA exercise, you can see that the resulting uncertainty distributions are not distributed normally, and are fat tailed as you say. In the full PSA, if implemented, I would strongly suspect that that resulting distributions will mostly be very fat tailed, and highly skewed rightward. The decision rules I suggested specifically combat this due to the decision rules not being sensitive to how heavy the right tail is, but very sensitive to the left tail.
I will see if I can add a note to clarify this, thanks!
Good idea, thanks! I'll edit it in in a moment.