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Normal Distribution Probability Calculation

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Normal Distribution Probability Calculation

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Questions and Answers

What is the formula for Expected Value of Perfect Information (EVwPI)?

EVwPI = Probability of State of Nature / Maximum Payoff under Perfect Information

EVwPI = EVPwPI − EPV

EVwPI = (0.5 * P200,000) + (0.5 * P0)

EVwPI = (Probability of State of Nature × Maximum Payoff under Perfect Information) / Expected Payoff Value (correct)

In the context of the provided text, what does Maximax refer to?

Compromise between an optimistic and a pessimistic decision

Least possible loss

Optimistic decision – highest possible gain (correct)

Expected Opportunity Loss

What is the Expected Value of Perfect Information (EVPI) in the scenario discussed?

P60,000 (correct)

P65,000

P100,000

P40,000

Under the Maximin approach, what decision is typically made?

Least possible loss Signup and view all the answers

What is the Hurwicz Criterion known for?

Compromise between optimism and pessimism Signup and view all the answers

How is Expected Opportunity Loss (EOL) calculated in the given scenario?

(0.5 x 100,000) + (0.5 x 20,000) Signup and view all the answers

Which decision-making strategy is based on maximizing the potential gains?

Maximax Signup and view all the answers

What is the primary objective of Expected Value of Perfect Information (EVPI)?

Maximize potential gains Signup and view all the answers

Based on the text, which approach helps in making a 'balanced' decision between an optimistic and a pessimistic one?

'Hurwicz Criterion' Signup and view all the answers

'Criterion of realism' according to Hurwicz involves what kind of decision-making?

'Compromise between optimistic and pessimistic' Signup and view all the answers