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MSE 252: Decision Analysis > final > Flashcards

final Flashcards

1
Q

Prior

A

probability distribution of interest conditioned on your information

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2
Q

likelihood

A

conditional distribution of the observed distinction given the distinction of interest

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3
Q

posterior

A

conditional distribution of the distinction of interest given the observed distinction

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4
Q

preposterior

A

the probability distribution of the observed distinction

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5
Q

sensitivity

A

probability that the test says positive given that the distinction of interest is really positive

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6
Q

specificity

A

probability that the test says negative given that the distinction of interest is negative

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7
Q

symmetric test

A

test is symmetric if sensitivity = specificity, otherwise asymmetric

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8
Q

relevant test

A

test is relevant if the probabilities assigned to the test outcome are different depending on the state of the distinction of interest

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9
Q

material test

A

test is material if results possibly change the preferred alternative. If decision the same no matter test outcome, it’s immaterial (also, assuming free test)

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10
Q

risk attitude

A

determined by relationship between persons CE of deal and e-value of the money

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11
Q

risk neutral

A

CE for deal is e-value of money. U-curve linear

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12
Q

risk averse

A

CE for deal < e-value of money; u-curve concave

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13
Q

risk preferring

A

CE for deal > e-value of money; u-curve convex

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14
Q

risk odds

A

r is risk attitude of delta person; r=p/(1-p)

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15
Q

risk tolerance

A

1/ln( r)

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16
Q

risk aversion

A

ln( r)

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17
Q

delta property

A

delta person if adding amount B to all prospects increases the CE of deal by B; PIBP=PISP; don_t need wealth

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18
Q

VOC

A

decider’s PIBP for clairvoyance to eliminate uncertainty in a situation

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19
Q

VFC

A

CE of deal with clairvoyance when cost of clairvoyance is 0

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20
Q

prospect

A

possible future state of the world–no uncertainty

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21
Q

deal

A

set of future prospects and their probabilities

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22
Q

preference probability

A

probability p at which decider indifferent between A for sure or a deal for B and W with p prob of B

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23
Q

five rules of actional thought

A

probability, order, equivalence, substitution, choice

24
Q

probability rule

A

we shall consider the world in terms of prospects and their probabilities

25
Q

order rule

A

we can make a list of possible prospects in order of preference; no loops or you’d have a money pump

26
Q

equivalence rule

A

a CE can be found. There is some p that makes you indifferent between B for sure and A or C with p for A

27
Q

substitution rule

A

given equivalent deals, you are willing to substitute one for the other

28
Q

choice rule

A

you must prefer the deal with the highest probability of the prospect you like the best

29
Q

e value

A

probability weighted average of a measure.

30
Q

u value

A

preference probability that’s been scaled

31
Q

expert

A

has powerful distinctions, has physical skills, knows history/borders of field, has humility

32
Q

clairvoyance

A

information that resolves all uncertainty about an uncertainty

33
Q

distinction

A

thought that separates a large group into degrees

34
Q

degrees must be_

A

mutually exclusive and collectively exhaustive

35
Q

useful

A

a distinction means what we want it to mean and helps us achieve clarity of action

36
Q

decision basis

A

alternatives, preferences, information

37
Q

relevant

A

distinctions are relevant when knowledge of one will affect our beliefs about the other

38
Q

decision node

A

rectangle, represent decisions made

39
Q

uncertainty node

A

oval, represents an uncertainty

40
Q

deterministic node

A

two ovals, represents deterministic function of its inputs; if we know its inputs, we know the deterministic node

41
Q

value node

A

hexagon or something, also a deterministic node but represents value the decision maker is trying to maximize

42
Q

relevance arrow

A

between two uncertainties; absence implies irrelevance, presence implies possible relevance (based on conditioned state of information)
“B is conditioned on A and may be relevant to A”

43
Q

information arrows

A

arrows that enter a decision node; at the time of the decision, we know the outcomes of the things going into it
“C and D1 are known when D2 is made”

44
Q

influence arrows

A

from a decision node into an uncertainty node; decision we’re making influences the probability distribution of the uncertainty
“my choice in D may affect the distribution of uncertainty C”

45
Q

functional arrows

A

enter a deterministic or a value node

“F is a deterministic function of D and E”

46
Q

direct value arrows

A

functional arrows that enter into the value node

47
Q

four rules of arrow flipping

A
  1. add arrows wherever you want, but dont make a cycle!
  2. You can flip an arrow if the uncertainties are based on same info
  3. Cant remove arrows arbitrarily
  4. no dancing
48
Q

sunk cost principle

A

ignore past events and nonrecoverable loss of resources unless they affect your thoughts about the present or future

49
Q

&

A

background state of information

50
Q

associative logic error

A

the mistake you make if all lung cancer patients smoke and you think all smokers have lung cancer

51
Q

responsible

A

have the ability to choose our response to environmental stimuli

52
Q

proactive

A

recognition that we are responsible for our own lives

53
Q

circle of concern

A

things we care about

54
Q

circle of influence

A

things we have some degree of control over

55
Q

decision

A

irrevocable or irreversible choice among alternative ways to allocate resources

56
Q

value in use

A

how much an object is worth to you once it is integrated into your life and you can’t sell or exchange it

MSE 252: Decision Analysis (2 decks)

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