COB 291 Lecture Notes - Lecture 6: Steve Hinton, Perfect Information, Expected Value Of Perfect Information
Document Summary
14. 0 introduction: there are two primary causes difficult decision making, uncertainty: this is regarding the future, conflicting values or objectives. 14. 3 characteristics of decision problems: a decision must involve at least 2 alternatives for addressing the problem. Alternative: a course of action intended to solve a problem. There can be more than 2 alternatives but no less than 2. Alternatives are evaluated on the basis of the value they add to one or more decision. Example: criteria used to evaluate a job offer criteria. Alternatives: starting salary, expected salary, desirability of the job location, opportunity for promotion, and career advancement. Criteria: represent various factors that are important to the decision maker and are influenced by the alternative. Not all criteria can be expressed in terms of monetary value, making comparisons of the alternatives is more difficult. The values assumed by the various decision criteria under each alternative depends on the different states of nature the criteria can occur in.
