Suppose that a decision-maker faced with three decision alternatives (d1.d2, and d3) and four states of nature (s1,s2,s3, and s4) develops the following profit payoff table: State of Nature Decision Alternative s1 $2 $3 s4 d1 14 9 10 5 d2 9 10 8 7 d3 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(maximax), conservative (maxmin), and minimax regret approach? b) Assume that the payoff table provides cost rather than profit payoffs. What is the recommended decision using the optimistic(maximax), conservative (maxmin), and minimax regret approach? |