MKTG 345 Chapter Notes - Chapter 1: Bounded Rationality, Expected Value Of Perfect Information, Emv
Document Summary
Steps: identify the problem, specify objectives and criteria for a solution, develop suitable alternatives, analyze and compare alternatives, select the best alternative, implement the solution, monitor to see that the desired result is achieved. Decisions occasionally turn out poorly due to unforeseeable circumstances; however, this is not the norm. More frequently poor decisions are the result of a combination of mistakes in the decision process. Failure to recognize the importance of each step. Failure to complete a step before jumping to the next step. Certainty: environment in which relevant parameters have known values. Risk: environment in which certain future events have probabilistic outcomes. Uncertainty: environment in which it is impossible to assess the likelihood of various possible future events. Decision making under uncertainty : decisions are sometimes made under complete uncertainty: no information is available on how likely the various states of nature are. Maximin: choose the alternative with the best of the worst possible payoffs.
