Which of the following statements is TRUE of the expected-value approach to selecting decision alternatives?
A) It mostly applies to one-time decisions.
B) It knows the state of nature in advance.
C) It is best suited for repeated decisions.
D) It is independent of probability estimates for events.

Question

Quizplus · Accepted Answer

The expected-value approach is particularly suited for situations where decisions are repeated over time, allowing the law of large numbers to average out the uncertainty inherent in the outcomes. This approach relies on probability estimates to calculate the expected value of different decisions, making it less applicable to one-time decisions or situations where probabilities are unknown or cannot be estimated accurately.

Which of the Following Statements Is TRUE of the Expected-Value