Decision Analysis Questions

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True/False

Indicate whether the sentence or statement is true or false.

T 1. A state of nature is an actual event that may occur in the future.

F 2. The maximin criterion results in the maximum of the maximum payoffs.

F 3. The Hurwicz criterion is a compromise between the maximax and maximin criteria.

T 4. The minimax regret criterion maximizes the maximum regret.

F 5. The Hurwicz criterion multiplies the worst payoff by the coefficient of optimism.

Multiple Choice

Identify the letter of the choice that best completes the statement or answers the question.

C 6. The maximax criterion results in the

a. minimum of the minimum payoffs

b. maximum of the minimum payoffs

c. maximum of the maximum payoffs

d. minimum of the maximum payoffs

A 7. The Hurwicz criterion multiplies the

a. best payoff by the coefficient of optimism

b. worst payoff by the coefficient of optimism

c. best payoff by the worst payoff

d. none of the above

C 8. The difference between expected payoff under certainty and expected payoff under risk is the

a.expected net value

b. expected rate of return

c. expected value of perfect information

d. expected value

C 9. Which of the following is not an approach for decision making under uncertainty?

a. minimax

b.maximin

c.decision tree

d.minimax regret

C 10. The ______________ of sample information is the ratio of the expected value of sample information to the expected value of perfect information

a. utilization

b. expected value

c. efficiency

d. coefficient

Solution Summary

Solution contains answers and explanation of multiple choice questions.