Class notes DECISION THEORY

These notes are well detailed and include illustrations to help you understand. It includes questions and answers to assist in your revision. CONTENTS: - Decision process - Decision making environment - deterministic situation (certainty), analytical hierarchical approach (AHA), risk and uncertainty, stochastic situations (risk), situations of uncertainty - Decision making under uncertainty - maximin, maximax, minimax regret, Hurwicz decision rule, Laplace decision rule - Decision making under risk - expected monetary value, expected opportunity loss, minimising risk using coefficient of variation, expected value of perfect information - Decision trees - sequential decision, expected value of sample information - Limitations of expected monetary value criteria