Which of the following is true about opportunity loss?
A)There is always at least one value of 0 for each alternative.
B)There is always at least one value of 0 for each state of nature.
C)Values can sometimes be negative.
D)Decision makers prefer the largest value possible.

Question

Quizplus · Accepted Answer

Opportunity loss is the difference between the best decision and the actual decision made in terms of the outcomes of different states of nature. Thus, for each state of nature, there is always at least one value of 0. Choice A is incorrect because opportunity loss can have values other than 0, including negative values (which indicate that the actual decision was better than the best decision). Choice D is incorrect because decision makers are trying to minimize opportunity loss, not maximize it.

Which of the Following Is True About Opportunity Loss