Suppose that a decision maker faced with four decision alternatives and four states of nature develops the following profit payoff table.

State of Nature Decision Alternative s1 s2 s3 s4 d1 14 9 10 5 d2 11 10 8 7 d3 9 10 10 11 d4 8 10 11 13

a. If the decision maker knows nothing about the probabilities of the four states of nature, what is the recommended decision using the optimistic, conservative and minimax regret approaches?

b. Which approach do you prefer? Explain. Is establishing the most appropriate approach before analyzing the problem important for the decision maker? Explain.

c. Assume that the payoff table provides cost rather than profit payoffs. What is the recommended decision using the optimistic, conservative and minimax regret approaches?