Decision Analysis:
A payoff table (profits) is shown below.
|
|
States of Nature
|
|
Decisions
|
S1
|
S2
|
S3
|
|
D1
|
10
|
8
|
6
|
|
D2
|
14
|
15
|
2
|
|
D3
|
7
|
8
|
9
|
a. Using the maximax criterion, what decision should be made by the decision maker?
b. Using the maximin criterion, what decision should be made by the decision maker?
c. Using an equal likelihood criterion, what decision should be made by the decision maker?
d. Using minimax regret criterion, what decision should be made by the decision maker?
e. If the probabilities of s1, s2, and s3 are 0.2, 0.4, and 0.4, respectively, what decision should be made by the decision maker?