Consider the following payoff table in which D1 through D4 represent decisions, S1 through S4 represent states of nature, and the values in the cells represent profits. $\begin{array}{c}
\begin{array}{c}
\
\text { D1 } &\
\text {D2 } &\
\text {D3} &\
\text {D4} &\
\end{array}
\begin{array}{|c|c|c|c|}
\hline \text { S1 } & \text { S2 } & \text { S3 } & \text { S4 } \
\hline-20 & 40 & 60 & 100 \
\hline 30 & 120 & 60 & -50 \
\hline 30 & 30 & 40 & 40 \
\hline 10 & -60 & 80 & 70 \
\hline
\end{array}
\end{array}$
The optimal decision under the maximax criterion is:
A)D1
B)D2
C)D3
D)D4

Question

Consider the following payoff table in which D1 through D4 represent decisions, S1 through S4 represent states of nature, and the values in the cells represent profits. $\begin{array}{c}
\begin{array}{c}
\
 \text { D1 } &\
 \text {D2  } &\
 \text {D3} &\
 \text {D4} &\
\end{array}
\begin{array}{|c|c|c|c|}
\hline \text { S1 } & \text { S2 } & \text { S3 } & \text { S4 } \
\hline-20 & 40 & 60 & 100 \
\hline 30 & 120 & 60 & -50 \
\hline 30 & 30 & 40 & 40 \
\hline 10 & -60 & 80 & 70 \
\hline
\end{array}
\end{array}$
 The optimal decision under the maximax criterion is:
A)D1
B)D2
C)D3
D)D4

Quizplus · Accepted Answer

The maximax criterion suggests selecting the decision that maximizes the maximum payoff. Looking at the table, we can see that the maximum payoff for D1 is 50, for D2 is 60, for D3 is 45, and for D4 is 40. Therefore, the optimal decision under the maximax criterion is D2, which has the highest maximum payoff of 60.

Consider the Following Payoff Table in Which D1 Through D4