19.3. Election results can affect the payoff from certain types of investments. Suppose a brokerage firm is faced with the prospect of investing $20 million a few weeks before the national election for president of the United States. They feel that if Republican is elected, certain types of investments will do quite well; but if a Democrat is elected, other types of investments will be more desirable. To complicate the situation, an independent candidate, if elected, is likely to cause investments to behave in a different manner. Following are the payoffs for different investments under different political scenarios. Use the data to reach a conclusion about which decision alternative to select. Use both the maximax and maximin criteria and compare the answers.

Election Winner

Republican Democrat Independent

60

15

-25

Investment

C

D

8998 -10

20

25

40

30

15

5