MAT 540 Week 3 Quiz 2:

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