Analytic decision making is based on logic and considers all available data and possible alternatives.
answer
True.
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A state of nature is an occurrence or a situation over which the decision maker has little or no control.
answer
True.
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If a decision maker can assign probabilities of occurrences to the states of nature, then the decision-making environment is Decision Making under Uncertainty.
answer
False.
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The expected monetary value of a decision alternative is the sum of all possible payoffs from the alternative, each weighted by the probability of that payoff occurring.
answer
True.
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In a decision tree, the expected monetary values are computed by working from right to left.
answer
True.
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Which of the following is NOT considered a step in the decision-making process?
answer
Minimize costs whenever possible.
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In terms of decision theory, an occurrence or situation over which the decision maker has no control is called a(n):
answer
State of Nature.
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What is a tabular presentation that shows the outcome for each decision alternative under the various possible states of nature called?
answer
Payoff Table.
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What decision criterion would be used by an optimistic decision maker solving a problem under conditions of uncertainty?
answer
Maximax.
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A decision maker who uses the maximin criterion when solving a problem under conditions of uncertainty is:
answer
A pessimist.
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Expected monetary value is most appropriate for problem solving that takes place:
answer
Under conditions of risk.
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What is the difference between the expected payoff under perfect information and the maximum expected payoff under risk?
answer
Expected value of perfect information.
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The likelihood that a decision maker will ever receive a payoff precisely equal to the EMV when making any one decision is:
answer
Low (near 0%).
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A decision tree is a(n):
answer
Graphical representation of alternatives and states of nature.
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A problem that involves a sequence of decisions:
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Can be better analyzed with a decision tree than by a decision table.
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The first step, and a key element, in the decision-making process is to:
answer
Clearly define the problem.
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