The sum over the states of nature of the payoff multiplied by probability of each state of nature is called what?
A)Payoff table
B)Expected monetary value
C)Decision tree
D)Expected value of perfect information
E)Bayes' rule

Question

Quizplus · Accepted Answer

The sum over the states of nature of the payoff multiplied by probability of each state of nature is called the expected monetary value. It is used to determine the best decision in situations of uncertainty by calculating the average outcome of each decision option. Option A refers to a table that shows the payoffs for each decision option and state of nature. Option C refers to a graphical representation of the decision-making process. Option D refers to the value that could be obtained if perfect information was available before making a decision. Option E refers to a rule for updating probabilities based on new information.

The Sum Over the States of Nature of the Payoff