Question 1

With regard to decision making,most individuals are __________________.

Accepted Answer

A)  risk averse 
B)  risk seekers 
C)  risk maximizers 
D)  EMV maximizers 
E)  None of these options 
A)  risk averse 
B)  risk seekers 
C)  risk maximizers 
D)  EMV maximizers 
E)  None of these options

Question 2

A spider chart shows both the range (as a percentage)of the variability of the input variables as well as the resulting changes in the expected value

Accepted Answer

A) True 
 B)False

Question 3

The expected monetary value (EMV)criterion is sometimes referred to as "playing the averages" and for that reason should only be used for recurring decisions.

Accepted Answer

A) True 
 B)False

Question 4

The expected value of perfect information (EVPI)is the difference between the EMV with perfect information and the EMV with no additional information.

Accepted Answer

A) True 
 B)False

Question 5

Rational decision makers are never willing to violate the expected monetary value (EMV)maximization criterion when large amounts of money are at stake.

Accepted Answer

A) True 
 B)False

Question 6

Expected monetary value (EMV)is:

Accepted Answer

A)  the average or expected value of the decision if you knew what would happen ahead of time 
B)  the weighted average of possible monetary values,weighted by their probabilities 
C)  the average or expected value of the information if it was completely accurate 
D)  the amount that you would lose by not picking the best alternative 
E)  a decision criterion that places an equal amount on all states of nature 
A)  the average or expected value of the decision if you knew what would happen ahead of time 
B)  the weighted average of possible monetary values,weighted by their probabilities 
C)  the average or expected value of the information if it was completely accurate 
D)  the amount that you would lose by not picking the best alternative 
E)  a decision criterion that places an equal amount on all states of nature

Question 7

The expected value of perfect information (EVPI)is irrelevant concept since perfect information is almost never available at any price.

Accepted Answer

A) True 
 B)False

Question 8

If $v _ { i }$ 
is the monetary value corresponding to outcome i and $p _ { i }$ 
is its probability,then the expected monetary value is defined as: EMV = $\sum v _ { i } ^ { 2 } p _ { i }$ 
.

Accepted Answer

A) True 
 B)False

Question 9

Utility functions are mathematical functions that transform monetary values - payoffs and costs - into ________________.

Accepted Answer

A)  expected values 
B)  utility values 
C)  EMV values 
D)  anchor values 
E)  None of the above 
A)  expected values 
B)  utility values 
C)  EMV values 
D)  anchor values 
E)  None of the above

Question 10

Bayes' rule can be used for updating the probability of an uncertain outcome after observing the results of a test or study.

Accepted Answer

A) True 
 B)False

Question 11

There are three types of nodes that are used with the decision trees.They are the:

Accepted Answer

A)  mean nodes,variance nodes,and the standard deviation nodes 
B)  probability nodes,risk nodes,and the expected value nodes 
C)  supply nodes,demand nodes,and the expected value nodes 
D)  decision nodes,probability nodes,and end nodes. 
E)  horizontal nodes,vertical nodes,and the diagonal nodes 
A)  mean nodes,variance nodes,and the standard deviation nodes 
B)  probability nodes,risk nodes,and the expected value nodes 
C)  supply nodes,demand nodes,and the expected value nodes 
D)  decision nodes,probability nodes,and end nodes. 
E)  horizontal nodes,vertical nodes,and the diagonal nodes

Question 12

All problems related to decision making under uncertainty have three common elements:

Accepted Answer

A)  the mean,median,and mode 
B)  the set of decisions,the cost of each decision and the profit that can be made from each decision 
C)  the set of possible outcomes,the set of decision variables and the constraints 
D)  the set of decisions,the set of possible outcomes,and a value model that prescribes results 
E)  None of these options 
A)  the mean,median,and mode 
B)  the set of decisions,the cost of each decision and the profit that can be made from each decision 
C)  the set of possible outcomes,the set of decision variables and the constraints 
D)  the set of decisions,the set of possible outcomes,and a value model that prescribes results 
E)  None of these options

Question 13

In a multistage decision problem,decisions and outcomes alternate.That is,a decision maker makes a decision,then some uncertainty is resolved,then the decision maker makes a second decision,then some further uncertainty is resolved,and so on.

Accepted Answer

A) True 
 B)False

Question 14

When you use the expected monetary value (EMV)criterion,you are not using all of the information that is shown in the risk profiles of alternatives,since you are only comparing the means.

Accepted Answer

A) True 
 B)False

With regard to decision making,most individuals are __________________.

A spider chart shows both the range (as a percentage)of the variability of the input variables as well as the resulting changes in the expected value

The expected monetary value (EMV)criterion is sometimes referred to as "playing the averages" and for that reason should only be used for recurring decisions.

The expected value of perfect information (EVPI)is the difference between the EMV with perfect information and the EMV with no additional information.

Rational decision makers are never willing to violate the expected monetary value (EMV)maximization criterion when large amounts of money are at stake.

Expected monetary value (EMV)is:

The expected value of perfect information (EVPI)is irrelevant concept since perfect information is almost never available at any price.

If $v _ { i }$ is the monetary value corresponding to outcome i and $p _ { i }$ is its probability,then the expected monetary value is defined as: EMV = $\sum v _ { i } ^ { 2 } p _ { i }$ .

Utility functions are mathematical functions that transform monetary values - payoffs and costs - into ________________.

Bayes' rule can be used for updating the probability of an uncertain outcome after observing the results of a test or study.

There are three types of nodes that are used with the decision trees.They are the:

All problems related to decision making under uncertainty have three common elements:

In a multistage decision problem,decisions and outcomes alternate.That is,a decision maker makes a decision,then some uncertainty is resolved,then the decision maker makes a second decision,then some further uncertainty is resolved,and so on.

When you use the expected monetary value (EMV)criterion,you are not using all of the information that is shown in the risk profiles of alternatives,since you are only comparing the means.

Introduction to Data Analysis and Decision Making

Describing the Distribution of a Single Variable

Finding Relationships Among Variables

Probability and Probability Distributions

Normal, Binomial, Poisson, and Exponential Distributions

Sampling and Sampling Distributions

Confidence Interval Estimation

Hypothesis Testing

Regression Analysis: Estimating Relationships

Regression Analysis: Statistical Inference

Time Series Analysis and Forecasting

Introduction to Optimization Modeling

Optimization Models

Introduction to Simulation Modeling

Simulation Models

Data Mining

Importing Data Into Excel

Analysis of Variance and Experimental Design

Statistical Process Control

Filters

Exam 6: Decision Making Under Uncertainty

With regard to decision making,most individuals are __________________.

A spider chart shows both the range (as a percentage)of the variability of the input variables as well as the resulting changes in the expected value

The expected monetary value (EMV)criterion is sometimes referred to as "playing the averages" and for that reason should only be used for recurring decisions.

The expected value of perfect information (EVPI)is the difference between the EMV with perfect information and the EMV with no additional information.

Rational decision makers are never willing to violate the expected monetary value (EMV)maximization criterion when large amounts of money are at stake.

Expected monetary value (EMV)is:

The expected value of perfect information (EVPI)is irrelevant concept since perfect information is almost never available at any price.

If viv _ { i }vi​ is the monetary value corresponding to outcome i and pip _ { i }pi​ is its probability,then the expected monetary value is defined as: EMV = ∑vi2pi\sum v _ { i } ^ { 2 } p _ { i }∑vi2​pi​ .

Utility functions are mathematical functions that transform monetary values - payoffs and costs - into ________________.

Bayes' rule can be used for updating the probability of an uncertain outcome after observing the results of a test or study.

There are three types of nodes that are used with the decision trees.They are the:

All problems related to decision making under uncertainty have three common elements:

In a multistage decision problem,decisions and outcomes alternate.That is,a decision maker makes a decision,then some uncertainty is resolved,then the decision maker makes a second decision,then some further uncertainty is resolved,and so on.

When you use the expected monetary value (EMV)criterion,you are not using all of the information that is shown in the risk profiles of alternatives,since you are only comparing the means.

Introduction to Data Analysis and Decision Making

Describing the Distribution of a Single Variable

Finding Relationships Among Variables

Probability and Probability Distributions

Normal, Binomial, Poisson, and Exponential Distributions

Sampling and Sampling Distributions

Confidence Interval Estimation

Hypothesis Testing

Regression Analysis: Estimating Relationships

Regression Analysis: Statistical Inference

Time Series Analysis and Forecasting

Introduction to Optimization Modeling

Optimization Models

Introduction to Simulation Modeling

Simulation Models

Data Mining

Importing Data Into Excel

Analysis of Variance and Experimental Design

Statistical Process Control

Filters

If $v _ { i }$ is the monetary value corresponding to outcome i and $p _ { i }$ is its probability,then the expected monetary value is defined as: EMV = $\sum v _ { i } ^ { 2 } p _ { i }$ .