Decision-Making Techniques in Scenario Analysis

The video discusses decision-making under risk and uncertainty, focusing on non-probability techniques. It introduces payoff tables and explores how risk preferences influence decisions. Three decision-making techniques are explained: Maximax, Maximin, and Minimax Regret Rule. Each technique is illustrated with examples, highlighting their application in different scenarios. The video concludes with a summary of decision rules and risk preferences.

What adds complexity to the decision-making process?

• Risk and uncertainty

• Simple scenarios

• Lack of alternatives

• Excessive information

Which type of decision-making technique requires less information?

• Probability-based

• Non-probability based

• Scenario planning

• Complex analysis

What is the first step in scenario analysis?

• Calculate payoffs

• Assess risks

• Determine alternatives

• Determine scenarios

How are alternatives and scenarios arranged in a payoff table?

• Alternatives in rows, scenarios in columns

• Scenarios in rows, alternatives in columns

• Both in columns

• Both in rows

What are the three categories of scenarios?

• Best, worst, average

• Optimistic, pessimistic, neutral

• Best, possible, most likely

• High, medium, low

What influences the analysis of different alternatives?

• Risk preference

• Technological advancements

• Market trends

• Historical data

Which decision rule is preferred by a risk taker?

• Maximax

• Maximin

• Average

• Minimax Regret

What does the Maximax technique focus on?

• Maximizing the best outcome

• Balancing risks

• Maximizing the worst outcome

• Minimizing losses

In the Maximax technique, what is selected for each alternative?

• Worst outcome

• Average outcome

• Best outcome

• Most likely outcome

What is the focus of the Maximin technique?

• Minimizing the worst outcome

• Maximizing the best outcome

• Maximizing regret

• Balancing outcomes