IMS555 - Chapter 4

What are the components to any decision?

• States of nature

• Alternatives

• Degree of certainty

• All items

What does an open alternative mean in decision theory?

• A definitive solution is always available

• New alternative can be invented at any time

• Associated with structured problems

• No new alternative can be added

In decision theory, what does it mean for a set of alternatives to be mutually exclusive?

• All alternatives must be chosen together

• Only one alternative in the set can be chosen

• Alternatives are not related to each other

• Multiple alternatives can be chosen at the same time

What are states of nature in decision theory?

• Internal factors

• Future events beyond the decision maker's control

• Controlled outcomes

• Certain outcomes

What is the purpose of a decision matrix in decision theory?

• To confuse decision makers

• To visualize decision problems

• To eliminate alternatives

• To complicate the decision-making process

What is the most common way to represent the values of outcomes in a decision matrix?

• Assigning probabilities

• Assigning utilities

• Assigning costs

• Assigning risks

What is the purpose of assigning weights to factors in a weighted decision matrix?

• To complicate the evaluation process

• To standardize the importance of criteria

• To confuse decision makers

• To eliminate alternatives

What does decision making under certainty imply?

• Complete knowledge of outcomes

• Incomplete information about outcomes

• Uncertain outcomes

• Unknown objectives

What is the difference between decision making under risk and uncertainty?

• Risk involves certain objectives, uncertainty involves uncertain objectives

• Risk involves complete information, uncertainty involves incomplete information

• Risk involves unknown outcomes, uncertainty involves known outcomes

• Risk involves known outcomes, uncertainty involves unknown outcomes

What is the purpose of assigning utilities in decision theory?

• To standardize the criteria

• To eliminate alternatives

• To represent the value of outcomes

• To confuse decision makers