Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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The options from which a decision maker chooses a course of action are
a. | called the decision alternatives. | b. | under the control of the decision
maker. | c. | not the same as the states of nature. | d. | All of the alternatives are
true. |
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2.
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States of nature
a. | can describe uncontrollable natural events such as floods or freezing
temperatures. | b. | can be selected by the decision maker. | c. | cannot be enumerated by the decision
maker. | d. | All of the alternatives are true. |
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3.
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A payoff
a. | is always measured in profit. | b. | is always measured in cost. | c. | exists for each pair
of decision alternative and state of nature. | d. | exists for each state of
nature. |
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4.
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Making a good decision
a. | requires probabilities for all states of nature. | b. | requires a clear
understanding of decision alternatives, states of nature, and payoffs. | c. | implies that a
desirable outcome will occur. | d. | All of the alternatives are
true. |
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5.
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A decision tree
a. | presents all decision alternatives first and follows them with all states of
nature. | b. | presents all states of nature first and follows them with all decision
alternatives. | c. | alternates the decision alternatives and states of nature. | d. | arranges decision
alternatives and states of nature in their natural chronological
order. |
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6.
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Which of the methods for decision making without probabilities best protects the
decision maker from undesirable results?
a. | the optimistic approach | b. | the conservative approach | c. | minimum
regret | d. | minimax regret |
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7.
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Sensitivity analysis considers
a. | how sensitive the decision maker is to risk. | b. | changes in the
number of states of nature. | c. | changes in the values of the
payoffs. | d. | changes in the available alternatives. |
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8.
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To find the EVSI,
a. | use the EVPI to calculate sample information probabilities. | b. | use indicator
probabilities to calculate prior probabilities. | c. | use prior and sample information probabilities
to calculate revised probabilities. | d. | use sample information to revise the sample
information probabilities. |
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9.
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Decision tree probabilities refer to
a. | the probability of finding the optimal strategy | b. | the probability of
the decision being made | c. | the probability of overlooked
choices | d. | the probability of an uncertain event occurring |
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10.
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For a maximization problem, the conservative approach is often referred to as
the
a. | minimax approach | b. | maximin approach | c. | maximax
approach | d. | minimin approach |
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