Decision theory, Mathematics

Assignment Help:

DECISION THEORY

People constantly make decisions in their private lives as well as in their work. Some decisions are qualitative in terms of their implications and significance, like, If I do not have coffee in the morning, I will feel flat throught the day and if I have, I will feel fresh. Other decisions involve elements which are quantifiable like, If I work on the machine for 6 hours per day the production would be 2,500 units and if I work for 8 hours per day the production would be 3,500 units.  

Decision making environments in which consequences of decisions are quantifiable.

Our discussion of decision theory is based on the following assumptions:

  1. The decision maker can define all decision alternatives or strategies which are being considered.
  2. He can define the various states of nature for the decision setting which are not under his control. Examples of states of nature might include possible economic conditions (boom, stagnation, recession, etc.) the various responses of competing decision makers, various weather conditions and so on. The states of nature can be categorical like above-average, below-average, average, etc. or numerical.
  3. He can estimate quantitatively the consequences (benefits or costs) of selecting any decision alternative and having any state of nature occurrence.

Decision making can be of three categories:

  1. Decision making under conditions of certainty – Complete certainty on the part of the decision maker as to which state of nature is going to occur.
  2. Decision making under conditions of uncertainty – No knowledge about the likelihood of occurrence of the various states of nature.
  3. Decision making under conditions of risk – Has sufficient knowledge about the states of nature to assign probabilities to their likelihood of occurrence.

Related Discussions:- Decision theory

Math, is this free for LIFE that means forever never ever going to pay

is this free for LIFE that means forever never ever going to pay

Algebra, If a^n+1 + b^n+1/a^n + b^n is the arithmetic mean of a and b then ...

If a^n+1 + b^n+1/a^n + b^n is the arithmetic mean of a and b then find n. Answer:Arithmatic mean of a,b is =(a+b)/2  from the problem (a+b)/2=(a^n+1 +b ^n+1)/(a^n+b^n)  then (a+

Between that two call numbers should she place the book, A librarian is ret...

A librarian is returning library books to the shelf. She uses the call numbers to denote while the books belong. She requires placing a book about perennials along with a call numb

X and Y Intercepts, Find the x and y intercepts for the following equations...

Find the x and y intercepts for the following equations: 3y=3x -y=-x-4 2x+3y=6 y=5

Basic indefinite integrals- computing indefinite integrals, Basic indefinit...

Basic indefinite integrals The first integral which we'll look at is the integral of a power of x.                                ∫x n dx = (x n +1 / n + 1)+ c,          n

Concrete to abstract-how mathematical ideas grow, Concrete to Abstract :  ...

Concrete to Abstract :  Mathematics, like all human knowledge, grows out of our concrete experiences. Let us take the example of three-dimensional shapes. Think about how you came

Jay bought twenty-five $0.37 stamps how much did he spend, Jay bought twent...

Jay bought twenty-five $0.37 stamps. How much did he spend? To ?nd how much Jay spent, you must multiply the cost of each stamp ($0.37) through the number of stamps purchased (

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd