You have $1,000 to invest. All the money must be placed in one of the three investments: gold, oil option, or mutual fund. If $1,000 is invested, the value of the investment one year from now depends on the state of the economy. Assume that each state of the economy is for each of the following decision criteria, determine the optimal decision:

a) Maximum

b) Maximum likelihood

c) Bayes’ decition rule

d) Suppose that the utility function for the value of the investment (x) one year from now is given by u(x) = in x. Determine which investment you should choose

Answer rating: 100% (QA)

a Maximin Lets tabulate the profits in each case negative sign indicates loss Payoff table Mu... View the full answer