Exam 9: Decision Analysis

Figure There is an option of paying $100 to have research done to better predict which state of nature will occur.When the true state of nature is S1,the research will accurately predict S1 60% of the time.When the true state of nature is S2,the research will accurately predict S2 80% of the time. -What is the posterior probability of S2 given that the research predicts S2?

What is the expected annual profit for the bus that he will decide to purchase using Bayes' decision rule?

What is the expected payoff for the decision to write the statistics book?

Figure There is an option of paying $100 to have research done to better predict which state of nature will occur.When the true state of nature is S1,the research will accurately predict S1 60% of the time.When the true state of nature is S2,the research will accurately predict S2 80% of the time. -Given that the research is done,what is the joint probability that the state of nature is S1 and the research predicts S1?

The maximum likelihood criterion ignores the payoffs for states of nature other than the most likely one.

A risk seeker has a decreasing marginal utility for money.

Figure The construction manager for ABC Construction must decide whether to build single family homes,apartments,or condominiums.he estimates annual profits (in $000)will vary with the population trend as follows: -If he uses the maximum likelihood criterion,which kind of dwellings will he decide to build?

The maximin criterion refers to:

What would be the total payoff is script #1 were a success,but its sequel were not?

Figure -The maximax strategy is:

The EVPI indicates an upper limit in the amount a decision-maker should be willing to spend to obtain information.

States of nature are alternatives available to a decision maker.

What is the expected payoff from selecting script #1?

What is his expected value of perfect information?

Figure There is an option of paying $100 to have research done to better predict which state of nature will occur.When the true state of nature is S1,the research will accurately predict S1 60% of the time.When the true state of nature is S2,the research will accurately predict S2 80% of the time. -What is the expected value of perfect information?

An advantage of payoff tables compared to decision trees is that they permit us to analyze situations involving sequential decisions.

Two people who face the same problem and use the same decision-making methodology must always arrive at the same decision. Multiple Choice Questions

An advantage of Sensit's Spider graph when compared to Sensit's Tornado chart is that it allows data values to be varied by different percentages.

Graphical analysis can only be used in sensitivity analysis for those problems that have two decision alternatives.

What is the probability that the economics book would wind up being placed with a smaller publisher?