Consider a decision problem with decisions A, B and C. We h…
Consider a decision problem with decisions A, B and C. We have determined for two unknown probabilities p and q the following relationships (equations) that are shown as Eq 1, Eq 2, and Eq 3. Eq 1: A is preferred to B if q > 0.7p + 0.1 Eq 2: A is preferred to C if q>1.2(0.01+p)(0.1+p)-0.3 Eq 3:B is preferred to C if q < 2p – 0.5 These functions are graphed below: sr1.png Carefully note the values on the y-axis (for q). Answer the following questions, using > if the first decision strategy is preferred (as in A > B means A is preferred to B) and < if the second decision strategy is preferred (as in A < B means that B is preferred to A). When stating the optimal decision strategy, use A, B, C or unknown if the optimal decision strategy cannot be determined. For Region "Z": A B A C B C The optimal decision strategy is For Region "Y": A B A C B C The optimal decision strategy is