Decision Theory and Correct Answer

DECISION

QUIZZES

1.
The value of perfect information is directly related to losses predicted with imperfect information.
A. True

B. False

A.
True

B.
False

2.
EVPI is the expected financial value of the regret for the optimal decision under risk.
A. True

B. False

A.
True

B.
False

3.
A decision tree branches out to include all of the possible decisions and all of the possible events we are capable of identifying.
A. True

B. False

A.
True

B.
False

4.
Because Payoffs and Probabilities are estimates, sensitivity analysis is useful.
A. True

B. False

A.
True

B.
False

5.
A decision tree requires five or more branches to be useful.
A. True

B. False

A.
True

B.
False

6.
A good decision process will offer the best chance of reaching a good decision.
A. True

B. False

A.
True

B.
False

7.
While all of these steps are important in reaching a good decision, which one of the following steps is often the most crucial in the decision-making process?
A.
Identifying the problem.

B.
Specifying objectives

C.
Developing alternatives

D.
Analyzing alternatives

E.
Selecting the best alternative

8.
Which one of the following won't generally be given as a reason for poor decisions?
A.
Unforeseeable circumstances

B.
Bounded rationality

C.
Sub-optimization

D.
Mistakes in the decision process

E.
All are reasons that are offered for poor decisions

9.
A table showing the present values for each alternative in every possible state of nature is called a _________ table.
A.
Bounded Rationality

B.
Decision Environment

C.
Decision Risk

D.
Payoff

E.
Present Value

10.
If the minimum expected regret is computed, it indicates to a decision-maker the:
A.
expected value of perfect information

B.