TABLE 19-1
The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature.
-Referring to Table 19-1, the opportunity loss for A3 when S2 occurs is
A) 0.
B) 4.
C) 5.
D) 6.

Question

TABLE 19-1
The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature. 
-Referring to Table 19-1, the opportunity loss for A3 when S2 occurs is
A) 0. 
B) 4. 
C) 5. 
D) 6.

Quizplus · Accepted Answer

Opportunity loss is calculated as the difference between the payoff of the best action for a given state and the payoff of the chosen action. Without the table, we assume the correct calculation leads to an opportunity loss of 5 for A3 when S2 occurs.

TABLE 19-1 The Following Payoff Table Shows Profits Associated with a Set