Unformatted text preview: Realize when to use conditional probability Identify events that are mutually exclusive Identify events that are collectively exhaustive Calculate conditional probability Calculate probability for data that follows a Binomial distribution Calculate probability for data that follows a Normal distribution Chapter 3 – Decision Theory Key Terms: Alternative State of Nature Regret Utility You should know how to: Derive probability loss (regret) matrix from payoff table Set up decision tree to represent sequence of decisions Choose optimal action based on the following criteria: o Maximax profit o Maximin profit o Minimax regret o Equally likely (Laplace) o Criterion of Realism (Hurwicz) o Max EMV / Min EOL o Max Expected Utility...
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 Spring '10
 Smith
 Economics, Probability theory, probability Calculate probability, Conditional Probability Mutually

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