Making a good decision
A)requires probabilities for all states of nature.
B)requires a clear understanding of decision alternatives,states of nature,and payoffs.
C)implies that a desirable outcome will occur.
D)All of these are correct.

Question

Quizplus · Accepted Answer

Making a good decision requires a clear understanding of decision alternatives, states of nature, and payoffs. This means that you must know what options are available, what potential outcomes can occur, and what the benefits or costs are for each outcome. While having probabilities for all states of nature (option A) can be helpful, it is not always necessary for making a good decision. Option C is not necessarily true, as a desirable outcome may not always occur. Therefore, option B is the best choice.

Making a Good Decision