# What is Laplace Criterion?

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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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