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Decision Analysis
Expected Monetary Value
Decision analysis can be used to determine strategies when a decision maker is faced with several decision alternatives and an uncertain or risk-filled pattern of future events. Before selecting a specific decision analysis technique, the kind of situation must be considered. Classifying decision-making situations is based on how much is known about those future events that are beyond the decision maker’s control (known as states of nature). Thus, the two types of situations are as follows:
Decision making under certainty (when states of nature are known)
Decision making under uncertainty (when states of nature are unknown)
The decision analysis techniques appropriate for risk identification, quantification, ...
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