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

Subject Areas : Futurology

Ahmad Boroumand ¹ , Mohsen Bahrami ²

1 - Master of Science in Future Studies Engineering, Faculty of Management, Science and Technology, Amirkabir University of Technology (Tehran Polytechnic) (Corresponding Athour) [e-mail]
2 - Head of Future Studies Institute and Amir Kabir University of Technology (Tehran Polytechnic)

Received: 2016-03-08 Accepted : 2016-07-04 Published : 2017-11-22

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

Abstract :

Scenarioscripting 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 asa 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 apparentand the conditional probabilities from node to node towards the future can be calculated. In this study, the researchers scanned the scientific literature and developed apractice step by step in a case study entitled " Next 5 Years Tehran Stock ExchangeScenarios". Wetried to perform this method and deliver feedback to strengthenit through interviews and questionnairesand 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 thisexpert-based method are to strengthen the recognition and diagnosis of favorable and unfavorable scenarios with probability of their occurrence, appearing future state mapat a glance, recognizing the transformational interruptionpointsand 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 thatit provides to imagine the future throughdeeperunderstanding and insight in the complex decision-making.