Decition analysis Flashcards
What is meant by states of nature in decition analysis
Things that you cannot controle in the furure
Can you controle decition alternatives
You can choose between the by definition
What is an influence diagram
A graphica device showing the relationship between decitions, chance events and consequences where squares represents decitions, circles represent chance events, diamonds represent consequences and lines connect the nodes, showing their relationship
What are payoff tables
A table showing the payoff of all combinations of decitions, chance events and
How does an optimistic vs conservative decitionmaker chose in a payoff table
An optimistic would chose the best of the optimal outcomes when choosing decisions while a conservative would choose the best payoff if assuming everything went terrible
Explain the minmax regret approach to decition making
for each state of nature calculate the difference between each payoff and the largest payoff for that state of nature then choose the one with the least regrets (opertunities lost and costs incurred)
Explain the expected value approach of decition making
Chose the decition with the best expected value of the states of nature and their probabilities
What does EVPI stand for in decision analysis
expected value with perfect information
How do you calculate EVPI
Subtract expected value from the highest possible value and choose the highest one
What does AHP stand fore in decision analysis
Analytic Hierarchy Process (AHP), to decide based on points and their comparative weights
A consistency ration of .1 in the analytical hierarchy process is good
True
What is a pairwise comparison matrix
A matrix where both rows and columns represent options and each value represents how well they compare with eachother.
