final

Question 1

Prior

Answer 1

probability distribution of interest conditioned on your information

Question 2

likelihood

Answer 2

conditional distribution of the observed distinction given the distinction of interest

Question 3

posterior

Answer 3

conditional distribution of the distinction of interest given the observed distinction

Question 4

preposterior

Answer 4

the probability distribution of the observed distinction

Question 5

sensitivity

Answer 5

probability that the test says positive given that the distinction of interest is really positive

Question 6

specificity

Answer 6

probability that the test says negative given that the distinction of interest is negative

Question 7

symmetric test

Answer 7

test is symmetric if sensitivity = specificity, otherwise asymmetric

Question 8

relevant test

Answer 8

test is relevant if the probabilities assigned to the test outcome are different depending on the state of the distinction of interest

Question 9

material test

Answer 9

test is material if results possibly change the preferred alternative. If decision the same no matter test outcome, it’s immaterial (also, assuming free test)

Question 10

risk attitude

Answer 10

determined by relationship between persons CE of deal and e-value of the money

Question 11

risk neutral

Answer 11

CE for deal is e-value of money. U-curve linear

Question 12

risk averse

Answer 12

CE for deal < e-value of money; u-curve concave

Question 13

risk preferring

Answer 13

CE for deal > e-value of money; u-curve convex

Question 14

risk odds

Answer 14

r is risk attitude of delta person; r=p/(1-p)

Question 15

risk tolerance

Answer 15

1/ln( r)

Question 16

risk aversion

Answer 16

ln( r)

Question 17

delta property

Answer 17

delta person if adding amount B to all prospects increases the CE of deal by B; PIBP=PISP; don_t need wealth

Question 18

VOC

Answer 18

decider’s PIBP for clairvoyance to eliminate uncertainty in a situation

Question 19

VFC

Answer 19

CE of deal with clairvoyance when cost of clairvoyance is 0

Question 20

prospect

Answer 20

possible future state of the world–no uncertainty

Question 21

deal

Answer 21

set of future prospects and their probabilities

Question 22

preference probability

Answer 22

probability p at which decider indifferent between A for sure or a deal for B and W with p prob of B

Question 23

five rules of actional thought

Answer 23

probability, order, equivalence, substitution, choice

Question 24

probability rule

Answer 24

we shall consider the world in terms of prospects and their probabilities

Question 25

order rule

Answer 25

we can make a list of possible prospects in order of preference; no loops or you'd have a money pump

Question 26

equivalence rule

Answer 26

a CE can be found. There is some p that makes you indifferent between B for sure and A or C with p for A

Question 27

substitution rule

Answer 27

given equivalent deals, you are willing to substitute one for the other

Question 28

choice rule

Answer 28

you must prefer the deal with the highest probability of the prospect you like the best

Question 29

e value

Answer 29

probability weighted average of a measure.

Question 30

u value

Answer 30

preference probability that's been scaled

Question 31

expert

Answer 31

has powerful distinctions, has physical skills, knows history/borders of field, has humility

Question 32

clairvoyance

Answer 32

information that resolves all uncertainty about an uncertainty

Question 33

distinction

Answer 33

thought that separates a large group into degrees

Question 34

degrees must be_

Answer 34

mutually exclusive and collectively exhaustive

Question 35

useful

Answer 35

a distinction means what we want it to mean and helps us achieve clarity of action

Question 36

decision basis

Answer 36

alternatives, preferences, information

Question 37

relevant

Answer 37

distinctions are relevant when knowledge of one will affect our beliefs about the other

Question 38

decision node

Answer 38

rectangle, represent decisions made

Question 39

uncertainty node

Answer 39

oval, represents an uncertainty

Question 40

deterministic node

Answer 40

two ovals, represents deterministic function of its inputs; if we know its inputs, we know the deterministic node

Question 41

value node

Answer 41

hexagon or something, also a deterministic node but represents value the decision maker is trying to maximize

Question 42

relevance arrow

Answer 42

between two uncertainties; absence implies irrelevance, presence implies possible relevance (based on conditioned state of information) "B is conditioned on A and may be relevant to A"

Question 43

information arrows

Answer 43

arrows that enter a decision node; at the time of the decision, we know the outcomes of the things going into it "C and D1 are known when D2 is made"

Question 44

influence arrows

Answer 44

from a decision node into an uncertainty node; decision we're making influences the probability distribution of the uncertainty "my choice in D may affect the distribution of uncertainty C"

Question 45

functional arrows

Answer 45

enter a deterministic or a value node | "F is a deterministic function of D and E"

Question 46

direct value arrows

Answer 46

functional arrows that enter into the value node

Question 47

four rules of arrow flipping

Answer 47

1. add arrows wherever you want, but dont make a cycle! 2. You can flip an arrow if the uncertainties are based on same info 3. Cant remove arrows arbitrarily 4. no dancing

Question 48

sunk cost principle

Answer 48

ignore past events and nonrecoverable loss of resources unless they affect your thoughts about the present or future

Question 49

&

Answer 49

background state of information

Question 50

associative logic error

Answer 50

the mistake you make if all lung cancer patients smoke and you think all smokers have lung cancer

Question 51

responsible

Answer 51

have the ability to choose our response to environmental stimuli

Question 52

proactive

Answer 52

recognition that we are responsible for our own lives

Question 53

circle of concern

Answer 53

things we care about

Question 54

circle of influence

Answer 54

things we have some degree of control over

Question 55

decision

Answer 55

irrevocable or irreversible choice among alternative ways to allocate resources

Question 56

value in use

Answer 56

how much an object is worth to you once it is integrated into your life and you can't sell or exchange it