There are three popular 'what if' analyses that can be performed to help you conceptualize what types of situations you may face in the future. These three, which we'll discuss in more detail below, are: sensitivity analysis, scenario analysis, and simulation analysis. A sensitivity analysis is an analysis that estimates how sensitive your dependent variable is to a change in an independent variable. In a sensitivity analysis, you are only looking at how sensitive the change in an outcome is based on changing a single variable. A scenario analysis is when you make assumptions about a number of independent variables and environmental factors, and consider their impact on the outcome of your analysis. Instead of looking at how one variable impacts the outcome, like in a sensitivity analysis, you look at many different factors that could impact a situation in the future.
- Model Validation Technique