Business Statistics

750 Business Statistics

under uncertainty. When probabilities of events are not given, deci-

sion making is based on several criteria such as Laplace (equally

likely decision) criterion; maximin or minimax criterion; maximax

or minimin criterion; Hurwicz criterion, and regret criterion.

Decision making under risk is a situation where more than one

state of nature exists and the decision maker has sufficient informa-

tion to assign probability values to the likelihood of occurrence of

each of these states. Expected monetary value (EMV); expected

opportunity loss (EOL), and expected value of perfect information

(EVPI) are three approaches ...