Module A - MANG305

The expected value with perfect information assumes that all states of nature are equally likely.

False

The maximax criterion of decision making requires that all decision alternatives have an equal probability of occurrence.

False

Doing nothing would yield how much profit if favorable market conditions prevail according to the following profit decision table?

20000

A decision maker who uses the maximin criterion when solving a problem under conditions of uncertainty is:

A Pessimist

If a decision maker can assign probabilities of occurrences to the states of nature, then the decision-making environment is Decision Making under Uncertainty.

False

If a decision maker has to make a particular decision only once, expected monetary value is a good indication of the payoff associated with the decision.

False

What decision criterion would be used by an optimistic decision maker solving a problem under conditions of uncertainty?

Maximax

Analytic decision making is based on logic and considers all available data and possible alternatives.

True

If a decision maker knows for sure which state of nature will occur, he/she is making a decision under certainty.

True

The maximin criterion is pessimistic, while the maximax criterion is optimistic.

True

The expected value of perfect information (EVPI) is the:

difference between the payoff under perfect information and the payoff under risk.

What is a tabular presentation that shows the outcome for each decision alternative under the various possible states of nature called?

payoff table

In terms of decision theory, an occurrence or situation over which the decision maker has no control is called a(n):

state of nature.

The expected value with perfect information is:

the expected return obtained when the decision maker knows which state of nature is going to occur before the decision is made.

Expected monetary value is most appropriate for problem solving that takes place:

under conditions of risk.