Question

Why do we incorporate the posterior probabilities in our decision tree?

A. The posterior analysis is used to correct the probabilities that are used for the prior decisionanalysis, leading eventually to more accurate estimations and, therefore, more accurate decision-making.

B. A posterior analysis is used to evaluate the effect of the quantity of investment. Consequently, the probabilities that are used for the prior decision analysis can be updated, leading eventually to more accurate estimations and, therefore, more accurate decision-making.

C. It differs for each case, and the reason for each decision tree can be different.

D. A posterior analysis is used to evaluate the effect of activities, which factually they have performed. More specifically, in the posterior analysis, additional information is available. Consequently, the probabilities that are used for the prior decision analysis can be updated, leading eventually to more accurate estimations and, therefore, more accurate decision-making.

Answer 1

Ans:

Option D is correct.

A posterior analysis is used to evaluate the effect of activities, which factually they have performed. More specifically, in the posterior analysis, additional information is available.Consequently, the probabilities that are used for the prior decision analysis can be updated, leading eventually to more accurate estimations and, therefore, more accurate decision-making.