Criteria and states of nature in decision analysis

Reference no: EM1320885

Q1) Let following payoff matrix.

State of nature
Decision	1	2	3
A	50	75	35
B	40	50	60
C	40	35	30

Must a decision maker ever choose decision alternative C? Describe your answer.

2) Describe the meaning of alternatives, criteria and states of nature. How are they utilized in decision analysis?

3) Give a personal example of when and how you could have used decision analysis to help in making decision.

4) Researchers have claimed that average number of headaches per student in a semester of Statistics is 12. Statistics students believe average is higher. In sample of n = 16 students mean is 14 headaches with deviation of 1.5. Which of given represent null and alternative hypotheses essential to test the students' belief?

a) H0: μ = 12 vs. Ha: μ > 12

b) H0: μ = 12 vs. Ha: μ < 12

c) H0: μ = 12 vs. Ha: μ ≠ 12

d) H0: μ < 12 vs. Ha: μ = 12

Reference no: EM1320885

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