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Questions and Answers
What does sensitivity analysis assess?
Which approach is associated with the maximization of optimistic outcomes?
What does the criterion of realism, as proposed by Hurwicz, consider in decision making?
What does the minimax regret strategy aim to minimize?
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What does the utility theory seek to maximize?
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Sequential Decision-making is not related to Markov Decision Process (MDP)
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Sensitivity Analysis can only be done through trial and error
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Maximize Expected Utility (MEU) seeks to minimize expected opportunity loss (EOL)
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Decision Making under certainty does not involve any risk
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Conditional probability is not a factor in Decision Making under risk
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Study Notes
Decision Making Strategies
- Sensitivity analysis assesses how changes in variables affect the outcome of a decision.
- The maximax approach is associated with the maximization of optimistic outcomes.
- The criterion of realism, as proposed by Hurwicz, considers the level of uncertainty or ambiguity in decision making.
Decision Making under Uncertainty
- The minimax regret strategy aims to minimize the maximum potential regret or opportunity loss.
Utility Theory
- Utility theory seeks to maximize the expected utility or satisfaction of a decision.
Misconceptions
- Sequential Decision-making is actually related to Markov Decision Process (MDP).
- Sensitivity Analysis can be done through various methods, not just trial and error.
- Maximize Expected Utility (MEU) seeks to maximize expected utility, not minimize expected opportunity loss (EOL).
- Decision Making under certainty does not exist in reality, as there is always some level of risk involved.
- Conditional probability is a crucial factor in Decision Making under risk.
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Description
Test your knowledge of decision making under certainty, uncertainty, and risk, as well as conditional probability and decision analysis. Explore concepts such as MAXIMAX, MAXIMIN, Criterion of realism, and MINIMAX REGRET in decision-making scenarios.
