Deck 10: Cd Supplement - Decision Analysis

Question 1

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

Answer 1

True

Question 2

The Laplace criterion treats states of nature as being equally likely.

Answer 2

True

Question 3

Figure
The maximax strategy is:

A)Buy.
B)Rent.
C)Lease.
D)High.
E)Low.

Answer 3

A

Question 4

Determining the worst payoff for each alternative and choosing the alternative with the "best worst" is the criterion called:

A)minimin.
B)maximin.
C)maximax.
D)maximum likelihood.
E)Bayes decision rule.

Question 5

The equally likely criterion assigns a probability of 0.5 to each state of nature.
Multiple Choice Questions

Question 6

The maximax approach is an optimistic strategy.

Question 7

The minimax regret criterion is a conservative criterion.

Question 8

Figure
The minimax regret strategy is:

A)Buy.
B)Rent.
C)Lease.
D)High.
E)Low.

Question 9

The maximin criterion refers to:

A)minimizing the maximum return.
B)maximizing the minimum return.
C)choosing the alternative with the highest payoff.
D)choosing the alternative with the minimum payoff.
E)None of the above.

Question 10

Figure
The maximum likelihood strategy is:

A)Buy.
B)Rent.
C)Lease.
D)High.
E)Low.

Question 11

The maximin approach involves choosing the alternative that has the "best worst" payoff.

Question 12

The maximin approach involves choosing the alternative with the highest payoff.

Question 13

Determining the average payoff for each alternative and choosing the alternative with the highest average is the criterion called:

A)minimin.
B)maximin.
C)equally likely.
D)maximum likelihood.
E)Bayes decision rule.

Question 14

Figure
The equally likely strategy is:

A)Buy.
B)Rent.
C)Lease.
D)High.
E)Low.

Question 15

Which of the following is not a criterion for decision making?

A)EVPI.
B)Maximin.
C)Maximax.
D)Equally likely.
E)Maximum likelihood.

Question 16

Figure
The realism strategy with a pessimism-optimism index of 0.5 is:

A)Buy.
B)Rent.
C)Lease.
D)High.
E)Low.

Question 17

The maximin criterion is an optimistic criterion.

Question 18

An example of maximax decision making is a person buying lottery tickets in hopes of a very big payoff.

Question 19

A weakness of the maximin approach is that it loses some information.

Question 20

Figure
The maximin strategy is:

A)Buy.
B)Rent.
C)Lease.
D)High.
E)Low.

Question 21

Figure
The equally likely strategy is:

A)small.
B)medium.
C)medium large.
D)large.
E)extra large.

Question 22

Figure
The maximum likelihood strategy is:

A)small.
B)medium.
C)medium large.
D)large.
E)extra large.

Question 23

Figure
The minimax regret strategy is:

A)small.
B)medium.
C)medium large.
D)large.
E)extra large.

Question 24

Figure
The realism strategy with a pessimism-optimism index of 0.5 is:

A)small.
B)medium.
C)medium large.
D)large.
E)extra large.

Question 25

Figure
The maximax strategy is:

A)small.
B)medium.
C)medium large.
D)large.
E)extra large.

Question 26

Figure
The maximin strategy is:

A)small.
B)medium.
C)medium large.
D)large.
E)extra large.