Question: Suppose that a decision maker faced with three decision alternatives: d1, d2, d3, and three states of nature: s1, s2, s3, develops the following profit

Suppose that a decision maker faced with three decision alternatives: d1, d2, d3, and three states of nature: s1, s2, s3, develops the following profit payoff table (with profits expressed in $K):

	State of Nature
Alternative	s1	s2	s3
d1	28	20	10
d2	18	20	22
d3	16	22	26

a) What is the recommended decision using the optimistic approach?

b) What is the recommended decision using the conservative

approach?

c) What is the recommended decision using the minimax regret approach?

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

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