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, what is the best action using the maximax criterion?
A) Action A1
B) Action A2
C) Action A3
D) It cannot be determined.

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, what is the best action using the maximax criterion?
A) Action A1 
B) Action A2 
C) Action A3 
D) It cannot be determined.

Quizplus · Accepted Answer

The maximax criterion chooses the action with the highest maximum payoff. In this case, Action A1 has the highest maximum payoff of 10, so it is the best action using the maximax criterion.

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