Laplace Criterion : This criterion is based on the principle of insufficient reason and
was developed by Thomas Bayels and supported by simon de laplace. The equally
likely decision criterion finds that alternative with the higest average outcome. The
decision maker first calculates the average outcome for every alternative. Average
outcome for every course of action is nothing but simple arithmetic mean of pay – offs
under each action. Then select the act with maximum average outcome. By using this criterion it is possible to convert a decision problem under certainty with equal
probability of each state of nature.
To illustrate the criterion consider following pay – off table.
Conditional Pay off of Acts
|
State |
A1 |
A2 |
A3 |
A4 |
|
S1 |
10 |
20 |
– 20 |
18 |
|
S2 |
16 |
20 |
40 |
12 |
|
S3 |
20 |
18 |
30 |
30 |
|
S4 |
0 |
30 |
20 |
– 10 |
|
Total |
46 |
80 |
70 |
50 |
|
Average |
11.5 |
20 |
17.5 |
12.5 |
Maximum Average = 20
\ Thus using Laplace Criterion Choose A2
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