Scenario Development by using Probability Trees; Case Study: The Future of Tehran Stock Exchange

Subject Areas : Futurology

Ahmad Borumand Kakhki ¹ , Mohsen Bahrami ²

1 - Graduate Student of Technology Foresight (M. Sc.), Department of Management, Science and Technology, Amirkabir University of Technology (Tehran Polytechnic), (Corresponding Author)
2 - President of Future Studies Research Institute and a member of the faculty at Amirkabir University of Technology (Tehran Polytechnic),

Received: 2015-02-16 Accepted : 2015-05-09 Published : 2016-11-21

Keywords: probability trees, Scenario, future, Tehran Stock Exchange,

Abstract :

Scenario scripting and development, one of the most important method in futures studies, can be resulted by using logic sequence of events methods like "probability scenario tree ". This method, despite its special benefits, was less valued by researchers and scenario planner. Trees were rarely used as a development tools but in this research, authors attempt to explain a special methods step by step that can set new writing and reading style for future scenarios examined in topics entities. In this way, contact to scenario is operated successively. Then possible future situations and images with conditional probabilities can be seen as a tree with a distinct routes from root (now status) to end which appear as a scenario. Identified key variables as driving forces of investigated matter and determining different and discrete status of them could make different chronological order of their occurrence apparent and the conditional probabilities from node to node towards the future can be calculated. In this study, the researchers scanned the scientific literature and developed a practice step by step in a case study entitled " Next 5 Years Tehran Stock Exchange Scenarios ". We tried to perform this method and deliver feedback to strengthen it through interviews and questionnaires and library studies too. The results of applying this method in Tehran Stock Exchange shows approval logic on probability calculations method and chronology of events. Events followed from the pre-known chance percent by experts and was so interesting. The advantages of this expert-based method are to strengthen the recognition and diagnosis of favorable and unfavorable scenarios with probability of their occurrence, appearing future state map at a glance, recognizing the transformational interruption points and Milestones in the future, sensitivity analysis and contingency planning. Results and outputs of this method can make fertile field for scenarios based planning and processing by experts, so that it provides to imagine the future through deeper understanding and insight in the complex decision-making.