If it is assumed that each possible state of nature has an equal likelihood of occurrence, the expected value criterion will yield the same result as:
A)maximin.
B)minimax
C)maximax
D)the principle of insufficient reason.

Question

Quizplus · Accepted Answer

The principle of insufficient reason assumes that each possible state of nature has an equal likelihood of occurrence. Therefore, the expected value criterion and the principle of insufficient reason will yield the same result. Maximin and minimax are strategies that are used under conditions of uncertainty, but they do not assume equal likelihoods of occurrence for each state of nature. The maximax criterion is a strategy that seeks to maximize the maximum possible outcome, which is not necessarily the same as the expected value.

If It Is Assumed That Each Possible State of Nature