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**Decision Analysis Online MCQs with Answers**

Decision analysis is a systematic approach used to:

a) Make random decisions

b) Make informed decisions under uncertainty

c) Make decisions based on intuition

d) Make decisions based on personal biases

The first step in the decision analysis process is to:

a) Identify the decision criteria

b) Identify the decision alternatives

c) Gather information and data

d) Define the problem or decision to be made

In decision analysis, the term “payoff” refers to:

a) The cost of a decision

b) The benefit or value associated with an outcome

c) The uncertainty of an outcome

d) The risk involved in a decision

Which of the following is not a component of decision analysis?

a) Decision criteria

b) Decision alternatives

c) Decision maker’s emotions

d) Probabilities of outcomes

Sensitivity analysis in decision analysis involves:

a) Analyzing the sensitivity of decision criteria to changes in probabilities and payoffs

b) Analyzing the emotions of decision makers

c) Analyzing the impact of decision alternatives on outcomes

d) Analyzing the impact of external factors on decision criteria

A decision tree is a graphical representation of:

a) Decision alternatives

b) Probabilities of outcomes

c) Payoffs

d) All of the above

The maximax criterion in decision analysis is based on:

a) Maximizing the minimum payoff

b) Maximizing the maximum payoff

c) Maximizing the average payoff

d) Minimizing the maximum regret

The maximin criterion in decision analysis is based on:

a) Maximizing the minimum payoff

b) Maximizing the maximum payoff

c) Maximizing the average payoff

d) Minimizing the maximum regret

The minimax regret criterion in decision analysis is based on:

a) Maximizing the minimum payoff

b) Maximizing the maximum payoff

c) Maximizing the average payoff

d) Minimizing the maximum regret

The expected value criterion in decision analysis is based on:

a) Maximizing the minimum payoff

b) Maximizing the maximum payoff

c) Maximizing the average payoff

d) Minimizing the maximum regret

The expected value criterion involves multiplying the probabilities of each outcome by the:

a) Minimum payoff

b) Maximum payoff

c) Average payoff

d) Regret associated with each outcome

The Hurwicz criterion in decision analysis involves:

a) Maximizing the minimum payoff

b) Maximizing the maximum payoff

c) Maximizing the weighted average payoff

d) Minimizing the maximum regret

The Hurwicz coefficient in the Hurwicz criterion represents the decision maker’s:

a) Risk aversion

b) Risk neutrality

c) Optimism

d) Pessimism

The expected utility theory in decision analysis is based on:

a) Maximizing the minimum payoff

b) Maximizing the maximum payoff

c) Maximizing the expected utility

d) Minimizing the maximum regret

The utility function in the expected utility theory represents the decision maker’s:

a) Risk aversion

b) Risk neutrality

c) Optimism

d) Pessimism

A decision with complete certainty is characterized by:

a) Perfect knowledge of the probabilities of outcomes

b) Perfect knowledge of the payoffs associated with outcomes

c) No uncertainty or ambiguity

d) All of the above

A decision with complete uncertainty is characterized by:

a) Perfect knowledge of the probabilities of outcomes

b) Perfect knowledge of the payoffs associated with outcomes

c) No knowledge of the probabilities or payoffs

d) All of the above

A decision with risk is characterized by:

a) Perfect knowledge of the probabilities of outcomes

b) Perfect knowledge of the payoffs associated with outcomes

c) Some knowledge of the probabilities and payoffs

d) All of the above

A decision with ambiguity is characterized by:

a) Perfect knowledge of the probabilities of outcomes

b) Perfect knowledge of the payoffs associated with outcomes

c) Uncertainty about the probabilities or payoffs

d) All of the above

The regret matrix in decision analysis represents:

a) The payoffs associated with each decision alternative and outcome

b) The probabilities of each decision alternative and outcome

c) The difference between the maximum payoff and the actual payoff for each decision alternative and outcome

d) The difference between the minimum payoff and the actual payoff for each decision alternative and outcome

A decision maker who is risk-averse is more likely to:

a) Choose the decision alternative with the highest maximum payoff

b) Choose the decision alternative with the highest minimum payoff

c) Choose the decision alternative with the highest expected payoff

d) Choose the decision alternative with the highest weighted average payoff

A decision maker who is risk-seeking is more likely to:

a) Choose the decision alternative with the highest maximum payoff

b) Choose the decision alternative with the highest minimum payoff

c) Choose the decision alternative with the highest expected payoff

d) Choose the decision alternative with the highest weighted average payoff

The concept of expected value of perfect information (EVPI) in decision analysis represents:

a) The value of having complete certainty about the probabilities and payoffs

b) The value of having incomplete knowledge about the probabilities and payoffs

c) The value of sensitivity analysis

d) The value of decision trees

The concept of expected value of sample information (EVSI) in decision analysis represents:

a) The value of having complete certainty about the probabilities and payoffs

b) The value of having incomplete knowledge about the probabilities and payoffs

c) The value of sensitivity analysis

d) The value of additional data or information

The concept of expected opportunity loss (EOL) in decision analysis represents:

a) The value of having complete certainty about the probabilities and payoffs

b) The value of having incomplete knowledge about the probabilities and payoffs

c) The cost associated with making a suboptimal decision

d) The value of additional data or information

The concept of value of perfect information (VPI) in decision analysis represents:

a) The value of having complete certainty about the probabilities and payoffs

b) The value of having incomplete knowledge about the probabilities and payoffs

c) The cost associated with making a suboptimal decision

d) The value of additional data or information

A decision maker who uses the expected value criterion is assuming that:

a) The probabilities and payoffs are known with certainty

b) The decision maker is risk-averse

c) The decision maker is risk-seeking

d) The decision maker is risk-neutral

A decision maker who uses the minimax regret criterion is assuming that:

a) The probabilities and payoffs are known with certainty

b) The decision maker is risk-averse

c) The decision maker is risk-seeking

d) The decision maker is risk-neutral

A decision maker who uses the Hurwicz criterion with a coefficient of 0.8 is assuming that:

a) The probabilities and payoffs are known with certainty

b) The decision maker is risk-averse

c) The decision maker is risk-seeking

d) The decision maker is risk-neutral

A decision maker who uses the expected utility theory is assuming that:

a) The probabilities and payoffs are known with certainty

b) The decision maker is risk-averse

c) The decision maker is risk-seeking

d) The decision maker is risk-neutral

In decision analysis, a dominance rule states that:

a) One decision alternative is always better than another

b) One decision criterion is always better than another

c) One decision alternative is always worse than another

d) One decision criterion is always worse than another

In decision analysis, the concept of risk is associated with:

a) The probability of an outcome occurring

b) The payoffs associated with each outcome

c) The decision maker’s attitude towards uncertainty

d) All of the above

A decision analysis model with multiple decision criteria is called a:

a) Univariate model

b) Multivariate model

c) Sensitivity analysis model

d) Risk analysis model

A decision analysis model that includes multiple decision alternatives and multiple criteria is called a:

a) Univariate model

b) Multivariate model

c) Sensitivity analysis model

d) Risk analysis model

In decision analysis, a trade-off analysis is used to:

a) Evaluate the value of perfect information

b) Evaluate the value of sample information

c) Evaluate the value of different decision alternatives based on multiple criteria

d) Evaluate the value of sensitivity analysis

The concept of regret in decision analysis represents:

a) The value of having complete certainty about the probabilities and payoffs

b) The value of having incomplete knowledge about the probabilities and payoffs

c) The cost associated with making a suboptimal decision

d) The value of additional data or information

A decision maker who is risk-neutral:

a) Is willing to take risks

b) Is risk-averse

c) Is risk-seeking

d) Is indifferent to risk

A decision maker who is risk-averse:

a) Is willing to take risks

b) Is risk-neutral

c) Is risk-seeking

d) Prefers certainty over uncertainty

A decision maker who is risk-seeking:

a) Is willing to take risks

b) Is risk-neutral

c) Is risk-averse

d) Prefers certainty over uncertainty