Exam 11: Decision Theory

Projected payoff corresponding to various levels of business expansion and economic conditions faced by Ramcast Cable Inc. is given in the table below. Using Hurwicz criterion with $\alpha=0.7$ , identify the correct decision for Ramcast Cable Inc.

Expected profit under certainty is equal to the expected value of perfect information for all payoff tables.

Opportunity loss of a decision can never be negative.

Projected payoff corresponding to various levels of business expansion and economic conditions faced by Ramcast Cable Inc. is given in the table below. Using maximin criterion, identify the correct decision for Ramcast Cable Inc.

Expected payoff corresponding to various levels of business expansion for \href{http://ThingsJamaica.com}{ThingsJamaica.com} Inc. is given in the table below. The probabilities of the events are also given. What is the expected value of perfect information (EVPI)?

The outcomes of a decision theory problem are usually known with certainty.

In solving a sensitivity analysis problem in a decision theory problem with 2 random outcomes and three decisions, the final result will depend on which random outcome's probability was plotted on the Xaxis.

Prior probabilities for economic boom, moderate growth, and recession in the Land of the Bipeds are given below. There is a Land of Mortals where there are only two states: Boost or Roast. Conditional probability of Boost or Roast, given various states of economic conditions in the Land of the bipeds, is also known and presented below. The $\mathrm{P}($ Recession/Roast) is

Expected payoff corresponding to various levels of business expansion and economic conditions faced by Ramcast Cable Inc. is given in the table below. The probabilities of the events are also given. Using expected monetary value criterion, identify the correct decision for Ramcast Cable Inc.

Which of the following is not a part of decision tree problem specification?

Jim Smith is weighing all the pros and cons of his three job offers at the end of his MBA program. His expected salary and benefits are related to the economic conditions that may be experienced in the next 3 years, the planning horizon for his first post-MBA job. Jim hypothesizes that the economy may be in one of two states-high unemployment or low unemployment. The details of the dollar benefits during the next 3 years, under various conditions, are given below in the table. What is range of probability of high unemployment that will make the stock analyst position EMV maximizing alternative?

Prior probabilities for economic boom, moderate growth, and recession in the Land of the Bipeds are given below. There is a Land of Mortals where there are only two states: Boost or Roast. Conditional probability of Boost or Roast, given various states of economic conditions in the Land of the bipeds, is also known and presented below. The $\mathrm{P}($ Boost $)$ is

In the following decision problem, you are considering two business opportunities at the end of your business education. One is a safe but less lucrative business (Bus-A) and the other a risky but attractive business (Bus-B). The expected five-year revenue differs significantly depending on boom, stagnation or recession in the national economy. The following table gives the payoff matrix and probabilities. At this time, you do not have reliable estimates of the probabilities of the economic conditions. (A) What is the best decision using maximax criterion? (B) What is the best decision using maximin criterion? (C) What is the best decision using minimax regret criterion? (D) What is the best decision using Hurwicz criterion with $\alpha=0.3$ ?

Expected value of perfect information (EVPI) will be greater than expected opportunity loss associated with the EMV maximizing decision.

Using sensitivity analysis, one can check whether the "best" decision continues to be the "best" decision over a wide range of probabilities.

Expected opportunity loss is the opportunity loss due to imperfect information.

Projected payoff corresponding to various levels of business expansion and economic conditions faced by Ramcast Cable Inc. is given in the table below. Using maximax criteria identify the correct decision for Ramcast Cable Inc.

Expected payoff corresponding to various levels of business expansion for \href{http://ThingsJamaica.com}{ThingsJamaica.com} Inc. is given in the table below. The probabilities of the events are also given. What is the maximum expected monetary value (EMV) corresponding to the EMV maximizing decision?

Jim Smith is weighing all the pros and cons of his three job offers at the end of his MBA program. His expected salary and benefits are related to the economic conditions that may be experienced in the next 3 years, the planning horizon for his first post-MBA job. Jim hypothesizes that the economy may be in one of two states-high unemployment or low unemployment. The details of the dollar benefits during the next 3 years, under various conditions, are given below in the table. What is range of probability of high unemployment that will make the Service Manager Trainee position EMV maximizing alternative?

If a decision theory problem has 3 decision alternatives and 4 states of nature, the number of payoffs in that problem will be