Exhibit 14.8
The following questions use the information below.
A company needs to buy a new insurance policy. They have three policies to choose from, A, B and C. The policies differ with respect to price, coverage and ease of billing. The company has developed the following AHP tables for price and summary. The other tables are not shown due to space limitations.
-Which decision rule optimistically assumes that nature will always be "on our side" regardless of what decision we make?
A) maximax decision rule.
B) maximin decision rule.
C) minimax regret decision rule.
D) minimin decision rule.

Question

Exhibit 14.8
The following questions use the information below.
A company needs to buy a new insurance policy. They have three policies to choose from, A, B and C. The policies differ with respect to price, coverage and ease of billing. The company has developed the following AHP tables for price and summary. The other tables are not shown due to space limitations.  
-Which decision rule optimistically assumes that nature will always be "on our side" regardless of what decision we make?
A) maximax decision rule. 
B) maximin decision rule. 
C) minimax regret decision rule. 
D) minimin decision rule.

Quizplus · Accepted Answer

The maximax decision rule is optimistic, assuming the best possible outcome will occur for each decision alternative, thus aiming to maximize the maximum payoff.

Exhibit 14.8 The Following Questions Use the Information Below