Homework - EVs and Utility Functions

1) Questions:

a. For most of this course we will use money as the principal single decision attribute. Why?

b. What is the "expectation value" for an uncertain event? How is it calculated?

c. What does it mean to "solve" a decision tree (or influence diagram)?

d. Why does one generally use the expectation of a decision branch as the primary criterion for selecting a decision option as opposed to some other criterion?

e. What is a "Risk Profile?" What does it tell you?

f. What does it mean for a decision option to dominate?

Some Other Potential Test Questions:

1) Briefly describe the three principal decision strategies. Which one will we use in this course? Why?

2) What does it mean to "fold back" a decision tree?

3) What is the process for "solving" a decision tree?

4) What is the process for "solving" an influence diagram?

5) What is the difference between deterministic dominance and stochastic dominance?

6) What does it mean to quantify a qualitative attribute?

7) Why would one want to quantify a qualitative attribute?

8) How does one quantify a qualitative attribute?

9) What is a multi-attribute analysis? What is its purpose?

10) What is a utility function? What is it used to do?

11) What is the range of (lowest and highest values for) a normalized utility function?

12) How does one construct a utility function for an attribute using proportional scaling?

13) Identify and briefly describe two methods for determining weight values for a utility function.

14) What role do aesthetics and intuition play in the development of a utility function?

15) What role does subjectivity play in developing a utility function?