This payoff matrix gives potential dollar gain values in thousands for strategies S1, S2, S3, and S4 for Sam's Pizza and competitive strategies CA1, CA2, and CA3 for Pam's Pizza.What is the maximum regret value for S2?
A)24
B)15
C)5

Question

This payoff matrix gives potential dollar gain values in thousands for strategies S1, S2, S3, and S4 for Sam's Pizza and competitive strategies CA1, CA2, and CA3 for Pam's Pizza.What is the maximum regret value for S2? 
A)24 
B)15 
C)5

Quizplus · Accepted Answer

The maximum regret value for S2 can be found by subtracting the outcome of S2 for each of the other strategies from the maximum outcome of each strategy. Thus, the maximum regret for S2 would be:
Max regret for S2 = max [(14-16), (17-8), (13-12)]
Max regret for S2 = max [-2, 9, 1]
Max regret for S2 = 9
Therefore, the maximum regret value for S2 is 9.

To determine the best choice(s), we can use the maximin strategy, which involves selecting the strategy with the highest minimum payoff. In this case, the highest minimum payoff is for S4, which has a minimum payoff of 13. Therefore, the best choice(s) is:

Answer: S4
 The maximin strategy suggests that S4 is the best choice as it has the highest minimum payoff of 13.

This Payoff Matrix Gives Potential Dollar Gain Values in Thousands