MAT 540 Quiz 2
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1. The coefficient of optimism is a measure of the decision maker's optimism. TRUE/ FALSE 2. A payoff table is a means of organizing a decision situation, including the payoffs from different decisions given the various states of nature. TRUE/ FALSE 3. The maximin criterion results in the maximum of the minimum payoffs. TRUE/ FALSE 4. A state of nature is an actual event that may occur in the future. TRUE/ FALSE 5. The ___minimizes the maximum regret. maximax regret criterion minimax regret criterion minimin regret criterion maximin regret criterion 6. The maximin criterion results in the minimum of the maximum payoffs maximum of the maximum payoffs maximum of the minimum payoffs minimum of the minimum payoffs 7. A dominant decision is one that has better payoff than another decision under each state of nature. TRUE/ FALSE 8. The maximin approach to decision making refers to minimizing the maximum return maximizing the minimum return maximizing the maximum return minimizing the minimum return 9. The maximax criterion results in the maximum of the minimum payoffs. TRUE/ FALSE 10. Determining the worst payoff for each alternative and choosing the alternative with the best worst is called maximin
minimin maximax minimax 11. The Hurwicz criterion is a compromise for the maximin criterion for the maximax criterion between the maximax and maximin criteria none of the above 12. The maximax criterion results in the maximum of the minimum payoffs maximum of the maximum payoffs minimum of the maximum payoffs minimum of the minimum payoffs 13. Regret is the difference between the payoff from the best decision and all other decision payoffs. TRUE/ FALSE 14. Regret is the difference between the payoff from the best decision and all other decision payoffs worst decision and all other decision payoffs best decision and the worst decision payoffs none of the above 15. The minimax regret criterion maximizes the minimum regret minimizes the minimum regret minimizes the maximum regret maximizes the maximum regret 16. The Hurwicz criterion is a compromise between the maximax and maximin criteria. TRUE/ FALSE 17. The term opportunity loss is most closely related to maximin regret maximax regret minimax regret minimin regret 18. The equal likelihood criterion multiplies the decision payoff for each state of nature by an equal weight. TRUE/ FALSE
19. The basic decision environment categories are certainty risk uncertainty all of the above 20. Expected opportunity loss is the expected value of the regret for each decision. TRUE/ FALSE