1)When the probability of each state of nature occurring is unknown, the situati
ID: 3157826 • Letter: 1
Question
1)When the probability of each state of nature occurring is unknown, the situation is referred to as decision making under:
a.
certainty
b.
uncertainty
c.
risk
d.
expected value
2)The strategy that represents a hybrid between optimistic and pessimistic is:
a.
LaPlace
b.
Minimax regret
c.
Hurwicz
d.
Maximin
3)The EVPI is:
a.
the theoretical value of perfect knowledge
b.
a decision making criterion useful when probabilities of states of nature are not known
c.
the primary strategy to use with decision making under certainty
d.
None of the above are correct.
4)The production example demonstrated:
a.
decision making under risk
b.
the creation of a payoff table
c.
an application of expected value
d.
All of the above are correct.
a.
certainty
b.
uncertainty
c.
risk
d.
expected value
Explanation / Answer
1)When the probability of each state of nature occurring is unknown, the situation is referred to as decision making under uncertinity as we dont know the probabilities of the event which can occur. therefore option B is correct
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