In Constructing a Payoff Table to Compute the Cost of Uncertainty

question 9

Multiple Choice

In constructing a payoff table to compute the cost of uncertainty, which of the following defines the correct order of steps taken?

• A) Add the probabilities, compute the expected value for each decision, and determine the best decision using expected-value decision criterion.
• B) Compute the expected value for each decision alternative, calculate the probabilities, and determine the best decision using expected-value decision criterion.
• C) Add the probabilities and determine the best decision using expected-value decision criterion.
• D) Add the probabilities, compute the expected value for each decision, and determine the best decision using highest values.

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