In the decision-theoretic approach to determining a cutoff score, the cutoff score chosen is that which maximizes expected utility of pass/fail decisions. This approach is not without its problems. In this paper several of these problems are considered: inaccurate parameter estimates, choice of test model and consequences, choice of subpopulations, optimal cutoff scores on various occasions, and cutoff scores as targets. It is suggested that these problems will need to be overcome and/or understood more thoroughly before the full potential of the decision-theoretic approach can be realized in practice.The decision-theoretic paradigm for setting cutoff scores with criterion-referenced tests works in the following manner. In making mastery decisions on the basis of criterion-referenced test scores, two kinds of errors can result: passing examinees who are true nonmasters and failing examinees who are true masters (Hambleton, Swaminathan, Algina, & Coulson, 1978). A loss function is attached to the two types of errors, and then a cutoff score is chosen to maximize expected utility or to minimize expected loss with the available examinee test data.Among the researchers who have described the use of decision theory for setting cutoff scores are Hambleton and Novick (1973), Huynh (1976), Van der Linden and Mellenbergh (1977), and Van der Linden (1980). e Despite the conceptual appeal of the approach to some researchers, 9 the approach appears to have a number of problems at the implementation stage which have not been thoroughly discussed in the psychometric literature, with the significant exception of a recent paper by Glass (1978). In fact, an inadequate cutoff score can arise through the use of decision theory because of these problems. To dante, these problems have not been encountered or discussed to any extent, perhaps because of the few actual applications of decision theory for setting cutoff scores. Still, in view of the apparent attractiveness of the approach and the number of advocates for the approach in the criterion-referenced testing literature, it is not unreasonable to expect an increase in the number of applications in the future. The purpose of this paper is to discuss five problems that arise when decision theory is used to set cutoff scores. The basic paradigm for setting optimal cutoff scores will be reviewed in the first section of this paper. In the subsequent sections, five problems with the decision-theoretic paradigm are discussed.Despite the problems with decision-theoretic procedures that will be considered in this paper, it may be that these procedures are the most appropriate to use in some situations. It should be emphasized that it is not the author intention to compare decision-theoretic procedures for setting standards with other available methods nor to suggest that the five problems are unique to decisionat The University of Iowa Libraries on May 31, 2015 apm.sagepub.com Downloaded from