Category
page 1Optimal decisions
loss function
in mathematical optimization, a function (to be minimized) representing the cost of each outcome
Markov decision process
mathematical model for sequential decision making under uncertainty
expected utility hypothesis
hypothesis that the subjective value of a gamble is the statistical expectation of one’s valuations (which may differ from dollar values) of the gamble’s outcomes
secretary problem
mathematical problem
Kelly criterion
formula for bet sizing that maximise expected value
Monte Carlo tree search
heuristic search algorithm based on random sampling
stopping time
specific type of “random time”: a random variable whose value is interpreted as the time at which a given stochastic process exhibits a certain behavior of interest
cost–utility analysis
form of financial analysis used to guide procurement decisions
feasible region
set of all possible points of an optimization problem that satisfy the problem's constraints
utility maximization problem
the fundamental optimization problem that economic agents face

response surface methodology
sequential experimentation for improvement and for finding an optimal response
Expenditure minimization problem
in microeconomics
optimal decision
decision that leads to the best outcome in decision theory
regret theory
economics model which includes a regret term in the utility function
Odds algorithm
method of computing optimal strategies for last-success problems