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Lecture 27

PHI 31 Lecture Notes - Lecture 27: Health Maintenance Organization, Combined Oral Contraceptive Pill


Department
Philosophy
Course Code
PHI 31
Professor
Griesemer James
Lecture
27

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LECTURE 27: 12/3/18
EVALUATING DECISIONS
Program
Part 1: Understanding the Problem
1) Available Options (mutually exclusive, exhaustive)
2) States of the World (mutually exclusive, exhaustive)
3) Outcomes (draw the matrix: know the potential options and outcomes)
4) Values (ranks of measure of outcome)
Part 2: Evaluating the Decision
5) Strategies (pick a strategy)
6) Evaluation
Ex:
1) Options: Treatment A, Treatment B
2) States: No complications, Complications
Pr(treatment A complications) = 0.10
Pr(treatment B complications) = 0.01
3) Outcomes:
A + No Complications = $1,000, A + Complications = $4,000
B + No Complications = $1,400, B + Complications = $3,000
4) Values:
5) Strategy
Decision with known risk → Expected Value Strategy
EV (treatment A): ($1,000 x 0.9) + ($4,000 x 0.1) = $900 + $400 =
$1,300
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