Sensitivity analysis
A)considers how sensitive the decision maker is to risk.
B)considers how changes in the number of states of nature can impact the recommended decision.
C)considers how changes in various aspects of the problem affect the recommended decision alternative.
D)None of these are correct.

Question

Quizplus · Accepted Answer

Sensitivity analysis considers how changes in various aspects of the problem affect the recommended decision alternative. It is a tool to assess the robustness of a decision and understand the impact of uncertainty or changes in assumptions on the recommended course of action. Option A considers only the decision maker's risk profile, and option B focuses on the number of states of nature, which may not cover various factors that may affect the decision-making process.

Sensitivity Analysis