Example 1 Decision Making under Uncertainty: Getz Company is at the stage to make a new production plant. The company may decide to build either a large or small plant, where there pay-off(profits) actually depend on the situation of the market in the future. For example, if they decide to build a large plant and the market becomes favorable, the payoff will be $200 000, but there will be a net loss of $180 000 (or $180 000) if the market is not favorable. There is of course the option of cancelling the plant idea for the time being, which has zero payoff in either market. Decision Table for Getz Products STATES OF NATURE FAVORABLE UNFAVORABLE ALTERNATIVES MARKET MARKET Construct large plant (A1) $200,000 -$180,000 Construct small plant (A2) $100,000 -$ 20,000 Do nothing (A) $ 0 $ 0 So, what should be the choice of the company according each of these decision making rules: 1. Maximax choice? 2. Maximin choice? 3. Equally likely choice? Example 2 Expected Monetary Value You roll a dice once and earn the face value of the dice you get, i.e., if you get 2, you will earn 2 TL. SO, what is the "expected monetary value of your trial" Expected Value=