The study of how changes in the probability assessments for the states of nature or changes in the payoffs affect the recommended decision alternative is known as
A)uncertainty analysis.
B)cost analysis.
C)sensitivity analysis.
D)probability analysis.

Question

Quizplus · Accepted Answer

Sensitivity analysis is the study of how changes in the probability assessments or payoffs affect the recommended decision alternative. It helps in identifying which variables have the most impact on the decision and can be used to test the robustness of the recommended decision alternative. Uncertainty analysis and probability analysis are part of sensitivity analysis, but they do not fully encompass the entire concept. Cost analysis is a separate concept that focuses on determining the cost of a particular decision.

The Study of How Changes in the Probability Assessments for the States