Question 4) Consider a decision analysis problem whose payoffs (in units of thousands of euros) are given by the following payoff table: State of Nature ernative 80 25 50 30 A 60 40 Prior probability 0.41 0.59 a) Which alternative should be chosen under the maximin payoff criterion? b) Which alternative should be chosen under the maximum likelihood criterion? c) Which alternative should be chosen under Bayes' decision rule? d) Using Bayes' decision rule, do sensitivity analysis graphically with respect to the prior probabilities to determine the crossover points where the decision shifts from one alternative to another. e) Use algebra to solve for the crossover points identified in part (d).
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
Course name: Stochastic models
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