The decision-criterion in which a decision-maker selects an alternative that maximizes \(H\) (criterion of realism) \(= [a \times (\text{maximum in column})] + [(1 - a) \times (\text{minimum in column})]\) is called
Hurwicz criterion
This is a decision-making-under-uncertainty problem, and the formula in the question is the signature of one particular criterion.
The criterion of realism recognises that a pure optimist and a pure pessimist both go too far, so it blends the best and the worst payoff of each alternative using a coefficient of optimism \(a\) that lies between 0 and 1. For each alternative it computes \(H = a \times (\text{maximum payoff}) + (1 - a) \times (\text{minimum payoff})\) and then chooses the alternative with the highest \(H\). This weighted blend of optimism and pessimism is exactly the Hurwicz criterion.
The other rules use different logic: the Laplace criterion assumes all states are equally likely and picks the alternative with the best simple average of payoffs; Wald's maximin looks only at each alternative's worst payoff and maximises that (pure pessimism); and the Bayesian (expected-value) criterion attaches probabilities to the states and maximises expected payoff.
Since the given formula weights only the maximum and minimum with \(a\) and \(1-a\), it identifies the Hurwicz rule.
Hence the criterion described is the Hurwicz criterion.
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Important Questions from Decision Making
Which of the following are necessary conditions for applying Simeon Denis Poisson distribution in the field of managerial decision making?
A. Each occurrence of an event is independent of the occurrence of the other event
B. The probability of an occurrence is the same for any two intervals of equal length
C. Poisson distribution describes continuous occurrences over a specific time interval
D. In each interval, occurrences can range from zero to infinity
Choose the correct answer from the options given below:
Which of the following common difficulties are faced in making decisions and implementing?
(A) Non-actionable information
(B) Unsupporting environment
(C) Easy acceptance by subordinates
(D) Ineffective communication
(E) Incorrect timing
Choose the correct answer from the options given below
The major components of Nicosia Model of consumer decision-making are:
A. The consumer's attitude based on firm's message exposure
B. Perceptual and learning constructs
C. Feedback in the form of purchase experience
D. Extensive problem solving by consumer
E. Consumer's product search and evaluation
Choose the correct answer from the options given below:
Match List - I with List - II.
List - I
Decision Rule
List - II
Rationale for applying the decision Rule to Down App.
(A)
Conjunctive
I)
"I bought the Smartphone App with the highest over all railing".
(B)
Disjunctive
(II)
"I down loaded the Smartphone App that had the most downloads".
(C)
Affect Referred
(III)
"I selected the Smart Phone App that had no bad features".
(D)
Majority vote
(IV)
"I picked the Smart Phone App that excelled in at least one attribute ".
Choose the correct answer from the options given below:
- What are the characteristics of programmed decisions ?
A. Problems are unique and novel
B. Solutions are based on rules and established procedures
C. Made by top management only
D. Problems are routine and repetitive
E. Conditions in which they occur are highly certain
Choose the most appropriate answer from the options given below :
