Question: Consider the following problem with three decision alternatives and three states of nature with the following payoff table representing profits: States of Nature S1 S2

Consider the following problem with three decision alternatives and three states of nature with the following payoff table representing profits:

		States of Nature
		S1	S2	S3
Decisions	d1	4	4	-2
	d2	0	3	-1
	d3	1	5	-3

a. What is the optimal decision if the decision maker is optimistic?

b. What is the optimal decision if the decision maker is pessimistic?

c. What is the optimal decision using the minimax regret approach?

d. If the probabilities that S1, S2, and S3 will occur are 0.2, 0.5, and 0.3, respectively, what is the optimal decision?

e. Given the information in (d), what is EVPI?

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aWhat is the optimal decision if the decision maker is optimistic An optimistic decision maker would use the optimistic maximax approach Under this ru... View full answer

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