Busıness Decısıon Models Deneme Sınavı Sorusu #1390512
Which of the following is true about maximum probability criterion?
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All the potential consequences multiplied by their associated probabilities. |
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The expected monetary value of each decision alternative is calculated. |
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The investor chooses the biggest one among the expected monetary values. |
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Decision maker confronts the various possible states of nature in a decision under risk. |
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It demonstrates the average additional amount the investor would have achieved by making the right decision. |
In this criterion, the decision maker confronts the various possible states of nature in a decision under risk and; he or she chooses the alternative that is best for the most likely state of nature, rather than calculating in all states of nature. With another saying, it states that the decision maker should ignore all possible events except the one most likely to occur, and should select the best possible result (maximum gain or minimum loss) in the given circumstances.
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