Which of the following is a decision-making criterion that isused for decision making under risk? a. expected monetary valuecriterion b. Hurwicz criterion (criterion of realism) c. optimistic(maximax) criterion d. equally likely criterion
Expert Answer
Which of the following is a decision-making criterionthat is used for decision making under risk?
CorrectAnswer:
- Expected monetary value criterion
Justification:
As in the Environment of Decision Making under Risk includevarious probabilities of Occurrence of different states of Nature,in such case by using following criterion as written below we willselect Optimum Course of action,
- Expected monetary value criterion
- Expected Opportunity Loss