Question

Which of the following is NOT used in decision making under risk?​

Answer 1

Answer:

(a) The decision-maker has complete information about available alternatives, and has a good idea of the probability of particular outcomes for each alternative(b) The decision-maker has complete information about available alternatives, but has no idea of the probability of particular outcomes for each alternative(c) The decision-maker has incomplete information about available alternatives, but has a good idea of the probability of particular outcomes for each alternative(d) Future environment is unpredictable and everything is in a state of flux(e) The decision-maker is not aware of all alternatives, the risks associated with each, or the consequences of each alternative, or their probabilities.

Answer 2

Ques. Which of the following criterion is not applicable to decision-making under risk?

(a) maximize expected return

(b) maximize return

(c) minimize expect regret

(d) knowledge of likelihood occurrence of each state of nature

Answer:

The correct answer is option (b) maximize return.

Step-by-step explanation:

• The decision-maker has full knowledge of all available options and a solid understanding of the likelihood of specific outcomes for each option.
• The decision-maker is fully informed about the choices that are accessible, but is unaware of the likelihood that specific outcomes will occur for each alternative.
• The decision-maker has little knowledge of the options offered, but a good understanding of the likelihood of certain outcomes for each option.
• The decision-maker is not aware of all options, the dangers involved with each, the repercussions of each alternative, or their probabilities.
• The future environment is uncertain and everything is in a state of flux.

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