STATISTICS II (İSTATİSTİK II) - (İNGİLİZCE) Dersi Decision Theory soru detayı:

PAYLAŞ:

SORU:

Explain the Hurwicz Criterion in decision making.


CEVAP:

In a paper in 1951, Leonard Hurwicz suggested a new method that balances the optimism and pessimism of the decision maker. In this method, the decision maker is allowed to have best and worst possible outcomes considered. In order to achieve this, Hurwicz suggests the use of coefficient of optimism. It is symbolized with ? and it is a decimal number between 0 and 1. If ? = 1, then the decision maker is hundred percent optimistic. If ? = 0, then the decision maker is hundred percent pessimistic. Since ? is the level of optimism we may easily call 1 – ? as the level of pessimism in the decision problem. Therefore, by changing the value of the ?, the decision maker may try to balance the optimism and pessimism. If you remember the weighted arithmetic mean, you may easily identify Hurwicz method of being a weighted average of best and worst possible outcomes.