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Exam 20: Decision Analysis

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Question 1

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Prior probabilities are the probabilities of the states of nature _____.

A) after obtaining sample information
B) prior to obtaining perfect information
C) prior to obtaining sample information
D) after obtaining perfect information

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Question 2

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A tabular representation of the payoffs for a decision problem is a _____.

A) decision tree
B) payoff table
C) matrix
D) sequential matrix

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Question 3

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A decision criterion that weights the payoff for each decision by its probability of occurrence is known as the _____.

Future events that cannot be controlled by the decision maker are called _____.

The difference between the expected value of an optimal strategy based on sample information and the "best" expected value without any sample information is called the _____ information.

New information obtained through research or experimentation that enables an updating or revision of the state-of-nature probabilities is _____.

A posterior probability associated with sample information is of the form _____.

The expected opportunity loss of the best decision alternative is the _____.

The expected value of information that would tell the decision maker exactly which state of nature is going to occur is the _____.

For a decision alternative, the weighted average of the payoffs is known as _____.

The probabilities for the states of nature must be _____.

Application of Bayes' theorem enables us to compute the _____.

Nodes indicating points where an uncertain event will occur are known as _____ nodes.

The probability of the states of nature, after use of Bayes' theorem to adjust the prior probabilities based on given indicator information, is called _____.

A line or arc connecting the nodes of a decision tree is called a(n) _____.

In computing an expected value (EV) , the weights are _____.

When working backward through a decision tree, the analyst should _____.

The uncontrollable future events that can affect the outcome of a decision are known as _____.

The approach to determine the optimal decision strategy involves _____.

The probability of one event given the known outcome of a (possibly) related event is known as _____ probability.