Which of the following statements is correct?
A)The EMV criterion selects the act with the largest expected monetary value.
B)The EOL criterion selects the act with the smallest expected opportunity loss.
C)The expected value of perfect information (EVPI)equals the smallest expected opportunity loss.
D)All of these choices are true.

Question

Quizplus · Accepted Answer

All the statements provided are correct. A) The Expected Monetary Value (EMV) criterion indeed selects the act with the largest expected monetary value, which is a common decision-making approach under risk. B) The Expected Opportunity Loss (EOL) criterion aims to minimize potential losses, hence it selects the act with the smallest expected opportunity loss. C) The Expected Value of Perfect Information (EVPI) is calculated as the difference between the expected payoff with perfect information and the expected payoff under the current information, which can also be understood as the cost of uncertainty or the smallest expected opportunity loss.

Which of the Following Statements Is Correct