Solved

In the Following Decision Problem, You Are Considering Two Business α=0.3\alpha=0.3

Question 56

Essay

In the following decision problem, you are considering two business opportunities at the end of your business education. One is a safe but less lucrative business (Bus-A) and the other a risky but attractive business (Bus-B). The expected five-year revenue differs significantly depending on boom, stagnation or recession in the national economy. The following table gives the payoff matrix and probabilities. At this time, you do not have reliable estimates of the probabilities of the economic conditions.
 In the following decision problem, you are considering two business opportunities at the end of your business education. One is a safe but less lucrative business (Bus-A) and the other a risky but attractive business (Bus-B). The expected five-year revenue differs significantly depending on boom, stagnation or recession in the national economy. The following table gives the payoff matrix and probabilities. At this time, you do not have reliable estimates of the probabilities of the economic conditions.     (A) What is the best decision using maximax criterion? (B) What is the best decision using maximin criterion? (C) What is the best decision using minimax regret criterion? (D) What is the best decision using Hurwicz criterion with  \alpha=0.3  ?
(A) What is the best decision using maximax criterion?
(B) What is the best decision using maximin criterion?
(C) What is the best decision using minimax regret criterion?
(D) What is the best decision using Hurwicz criterion with α=0.3\alpha=0.3 ?

Correct Answer:

verifed

Verified

(A) Maximizing the maximum gain (maximax...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents