In Exercise 19.38, the operator says that he has no idea regarding probabilities for the various weather conditions for the coming winter. What are some other criteria by which he might reach a decision, and what decision would be reached using each of them?
In exercise
A ski resort operator must decide before the winter season whether he will lease a snow-making machine. If he has no machine, he will make $20,000 if the winter is mild, $30,000 if it is typical, and $50,000 if the winter is severe. If he decides to lease the machine, his profits for these conditions will be $30,000, $35,000, and $40,000, respectively. The probability of a mild winter is 0.3, with a 0.5 chance of a typical winter and a 0.2 chance of a severe winter.