Heuristics (Decision-Making Tools)

Question 1

Heuristics

Answer 1

Mental shortcuts or rules of thumb that individuals use to simplify complex decision-making tasks when faces with incomplete information or uncertainty

Question 2

Maximax

Answer 2

Choose the decision with the best possible payoff

Question 3

Maximin

Answer 3

Choose the decision with the best worst-case payoff

Question 4

Average (Laplace)

Answer 4

Use the average outcome of all scenarios

Question 5

EMV (Expected Monetary Value)

Answer 5

Sum of all payoffs weighted by their probabilities. Used in risk-based decisions.