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LMR1006.
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- August 31, 2024 at 4:13 pm #710575
The following statements have been made about expected values:
1 Expected value is of limited use for decisions regarding outcomes which will be repeated often
2 Using expected value in decision making can lead to the worst possible outcome being ignored
3 The reliability of expected value calculations is heavily influenced by the accuracy of the
probabilities assigned to outcomesWhich of the statements are correct?
A.1, 2 and 3
B.1 and 2 only
C.1 and 3 only
D.2 and 3 only
The correct answer is D.Tutorial note: Expected value is most useful for decisions that are repeated often since the expected value is an average that would be expected if a decision were to be repeated many times, so statement (1) is incorrect.
why statement 2 is correct? isnt the answer suppose to be 3 only?
August 31, 2024 at 9:43 pm #710581Statement 2 is true because using expected value in decision making can sometimes lead to the worst possible outcome being ignored. This is because expected value focuses on the average outcome and may not fully consider the potential risks or extreme outcomes.
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