Question: A local real estate investor in Orlando is considering three alternative investments: a motel, a restaurant, or a theater. Profits from the motel or restaurant will be affected by the availability of gasoline & the number of tourists; profits from the theater will be relatively stable under any conditions. The following payoff table shows the profit or loss that could result from each investment:
|
Investment
|
|
Gasoline Availability
|
|
|
Shortage
|
Stable Supply
|
Surplus
|
|
Motel
|
-$8,000
|
$15,000
|
$20,000
|
|
Restaurant
|
2,000
|
8,000
|
6,000
|
|
Theater
|
6,000
|
6,000
|
5,000
|
Find the best investment, using the following decision criteria.
[A] Minimax regret
[B] Hurwicz [alpha = .4]
[C] Equal likelihood
[D] Maximax
[E] Maximin