Question 1

The optimal decision can change merely by introducing an additional, non-optimal alternative when using the minimax regret criterion.

Accepted Answer

A) True 
 B)False  True

Question 2

The difference between "risk" and "uncertainty" in decision analysis alludes to the difference between:

Accepted Answer

A) knowledge and uncertainty. 
B) pessimism and optimism. 
C) known and unknown probabilities. 
D) aggression and conservatism. 
A) knowledge and uncertainty. 
B) pessimism and optimism. 
C) known and unknown probabilities. 
D) aggression and conservatism. C

Question 3

What is the "principle of insufficient reason"?

Accepted Answer

(This principle implies the decision maker's belief that no outcome is more likely than any other, i.e., that all possible outcomes are equally likely.Note this is not the same as professing total ignorance concerning outcome likelihoods.)

Question 4

An aggressive decision maker would prefer the minimax regret criterion over the maximin criterion.

Accepted Answer

A) True 
 B)False

Question 5

Utilities are generally well approximated by monetary payoffs for:

Accepted Answer

A) risk-averse individuals. 
B) risk-preferring individuals. 
C) small businesses. 
D) large corporations. 
A) risk-averse individuals. 
B) risk-preferring individuals. 
C) small businesses. 
D) large corporations.

Question 6

Which of the following criteria represents an aggressive/optimistic approach?

Accepted Answer

A) maximin 
B) minimax 
C) minimax regret 
D) maximax 
A) maximin 
B) minimax 
C) minimax regret 
D) maximax

Question 7

The indifference approach for assigning utility values asks the decision maker which of two alternatives is preferred: the payoff under consideration or a chance at the highest payoff with a risk of the lowest payoff.

Accepted Answer

A) True 
 B)False

Question 8

The objective function in game theory is to maximize the value of the game.

Accepted Answer

A) True 
 B)False

Question 9

The Bayesian approach in decision analysis:

Accepted Answer

A) utilizes sample information only. 
B) utilizes prior information only. 
C) chooses between sample and prior information. 
D) combines sample and prior information. 
A) utilizes sample information only. 
B) utilizes prior information only. 
C) chooses between sample and prior information. 
D) combines sample and prior information.

Question 10

In some cases, the Expected Value of Sample Information can exceed the Expected Value of Perfect Information.

Accepted Answer

A) True 
 B)False

Question 11

Consider the payoff table in problem 7.The optimal decision under the minimax regret criterion is:

Accepted Answer

A) D1 
B) D2 
C) D3 
D) D4 
A) D1 
B) D2 
C) D3 
D) D4

Question 12

Consider the payoff table in problem 16.Suppose that each state of nature is equally likely to occur and that two indicators, I1 and I2, are possible.The conditional probabilities for indicator I1 given the states of nature are as follows: P(I1|S1) = .1, P(I1|S2) = .2, P(I1|S3) = .3, and P(I1|S4) = .4.The expected value of sample information is:

Accepted Answer

A) 0 
B) 5.50 
C) 45.50 
D) 90 
A) 0 
B) 5.50 
C) 45.50 
D) 90

Question 13

The expected value of perfect information (EVPI):

Accepted Answer

A) is the same as the expected return with perfect information (ERPI). 
B) is never less than the expected value of sample information (EVSI). 
C) does not require probabilities in its calculation. 
D) requires the availability of sample information. 
A) is the same as the expected return with perfect information (ERPI). 
B) is never less than the expected value of sample information (EVSI). 
C) does not require probabilities in its calculation. 
D) requires the availability of sample information.

Question 14

The decision maker who is neither optimistic nor pessimistic might use which criterion?

Accepted Answer

A) minimax 
B) maximin 
C) maximax 
D) the principle of insufficient reason 
A) minimax 
B) maximin 
C) maximax 
D) the principle of insufficient reason

Question 15

Consider the following payoff table in which D1 through D4 represent decisions, S1 through S4 represent states of nature, and the values in the cells represent profits. $\begin{array}{c}
\begin{array}{c}
\
 \text { D1 } &\
 \text {D2  } &\
 \text {D3} &\
 \text {D4} &\
\end{array}
\begin{array}{|c|c|c|c|}
\hline \text { S1 } & \text { S2 } & \text { S3 } & \text { S4 } \
\hline-20 & 40 & 60 & 100 \
\hline 30 & 120 & 60 & -50 \
\hline 30 & 30 & 40 & 40 \
\hline 10 & -60 & 80 & 70 \
\hline
\end{array}
\end{array}$
 The optimal decision under the maximax criterion is:

Accepted Answer

A) D1 
B) D2 
C) D3 
D) D4 
A) D1 
B) D2 
C) D3 
D) D4

Question 16

Consider the following payoff table in which D1 through D4 represent decisions, S1 through S4 represent states of nature, and the values in the cells represent profits. $\begin{array}{c}
\begin{array}{c}
\
 \text { D1 } &\
 \text {D2  } &\
 \text {D3} &\
 \text {D4} &\
\end{array}
\begin{array}{|c|c|c|c|}
\hline S 1 & S 2 & S 3 & S 4 \
\hline 30 & 20 & -50 & 100 \
\hline 60 & 120 & 40 & -80 \
\hline 20 & 0 & 60 & 80 \
\hline 40 & -60 & 80 & 80\
\hline
\end{array}\end{array}$ Suppose that each state of nature is equally likely to occur.The expected value of perfect information is:

Accepted Answer

A) 0 
B) 40 
C) 50 
D) 90 
A) 0 
B) 40 
C) 50 
D) 90

Question 17

Consider the decision analysis problem with states of nature Si, decision alternatives Aj, and the following payoff table:$\begin{array}{llll}
&\mathbf{S 1} & \text { S2 } & \text { S3 } & \text { S4 } \
A1&55 & 51 & 50 & 38 \
A2&39 & 42 & 42 & 48 \
A3&45 & 59 & 57 & 35
\end{array}$ What is the preferred alternative when using the:
A.maximin criterion?
B.maximax criterion?
C.minimax regret criterion?
D.principle of insufficient reason?

Accepted Answer

A.(A2)

B

Question 18

What is a "zero-sum" game? Give an example of a zero-sum game and an example of a game which is not zero-sum.

Accepted Answer

(A game in which the amount won by all p

Question 19

Suppose in a decision analysis problem, the decision maker's decision is based only on the expected monetary value of the possible outcomes.What does this imply, concerning the decision maker's utility function? Explain.

Accepted Answer

(It implies that the decision

Question 20

The fact that so many people enter sweepstakes and/or buy lottery tickets demonstrates the difference between:

Accepted Answer

A) the expected value and the expected utility criteria. 
B) altruism and selfishness. 
C) risk aversion and risk indifference. 
D) certainty and uncertainty. 
A) the expected value and the expected utility criteria. 
B) altruism and selfishness. 
C) risk aversion and risk indifference. 
D) certainty and uncertainty.

The optimal decision can change merely by introducing an additional, non-optimal alternative when using the minimax regret criterion.

The difference between "risk" and "uncertainty" in decision analysis alludes to the difference between:

What is the "principle of insufficient reason"?

An aggressive decision maker would prefer the minimax regret criterion over the maximin criterion.

Utilities are generally well approximated by monetary payoffs for:

Which of the following criteria represents an aggressive/optimistic approach?

The indifference approach for assigning utility values asks the decision maker which of two alternatives is preferred: the payoff under consideration or a chance at the highest payoff with a risk of the lowest payoff.

The objective function in game theory is to maximize the value of the game.

The Bayesian approach in decision analysis:

In some cases, the Expected Value of Sample Information can exceed the Expected Value of Perfect Information.

Consider the payoff table in problem 7.The optimal decision under the minimax regret criterion is:

The expected value of perfect information (EVPI):

The decision maker who is neither optimistic nor pessimistic might use which criterion?

Consider the following payoff table in which D1 through D4 represent decisions, S1 through S4 represent states of nature, and the values in the cells represent profits. D1 D2 D3 D4 S1 S2 S3 S4 -20 40 60 100 30 120 60 -50 30 30 40 40 10 -60 80 70 The optimal decision under the maximax criterion is:

What is a "zero-sum" game? Give an example of a zero-sum game and an example of a game which is not zero-sum.

Suppose in a decision analysis problem, the decision maker's decision is based only on the expected monetary value of the possible outcomes.What does this imply, concerning the decision maker's utility function? Explain.

The fact that so many people enter sweepstakes and/or buy lottery tickets demonstrates the difference between:

Introduction to Management Science Models

Introduction to Management Science Models

Applications of Linear and Integer Programming Models

Network Models

Project Scheduling Models

Forecasting

Inventory Models

Queuing Models

Simulation Models

Quality Management Models

Markov Process Models

Nonlinear Models:dynamic, Goal, and Nonlinear Programming

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Exam 6: Decision Models

The optimal decision can change merely by introducing an additional, non-optimal alternative when using the minimax regret criterion.

The difference between "risk" and "uncertainty" in decision analysis alludes to the difference between:

What is the "principle of insufficient reason"?

An aggressive decision maker would prefer the minimax regret criterion over the maximin criterion.

Utilities are generally well approximated by monetary payoffs for:

Which of the following criteria represents an aggressive/optimistic approach?

The indifference approach for assigning utility values asks the decision maker which of two alternatives is preferred: the payoff under consideration or a chance at the highest payoff with a risk of the lowest payoff.

The objective function in game theory is to maximize the value of the game.

The Bayesian approach in decision analysis:

In some cases, the Expected Value of Sample Information can exceed the Expected Value of Perfect Information.

Consider the payoff table in problem 7.The optimal decision under the minimax regret criterion is:

The expected value of perfect information (EVPI):

The decision maker who is neither optimistic nor pessimistic might use which criterion?

Consider the following payoff table in which D1 through D4 represent decisions, S1 through S4 represent states of nature, and the values in the cells represent profits. D1 D2 D3 D4 S1 S2 S3 S4 -20 40 60 100 30 120 60 -50 30 30 40 40 10 -60 80 70 The optimal decision under the maximax criterion is:

What is a "zero-sum" game? Give an example of a zero-sum game and an example of a game which is not zero-sum.

Suppose in a decision analysis problem, the decision maker's decision is based only on the expected monetary value of the possible outcomes.What does this imply, concerning the decision maker's utility function? Explain.

The fact that so many people enter sweepstakes and/or buy lottery tickets demonstrates the difference between:

Introduction to Management Science Models

Introduction to Management Science Models

Applications of Linear and Integer Programming Models

Network Models

Project Scheduling Models

Forecasting

Inventory Models

Queuing Models

Simulation Models

Quality Management Models

Markov Process Models

Nonlinear Models:dynamic, Goal, and Nonlinear Programming

Filters