Which of the following is a drawback of the maximin criterion?
A)It ignores the payoffs associated with the "high demand" state of nature.
B)It ignores the payoffs associated with the "low demand" state of nature.
C)It is not a good method to use when the states of nature are not equally probable.
D)It ignores the maximum payoff that could be realized if the decision maker were a risk taker.

Question

Quizplus · Accepted Answer

The maximin criterion focuses on the worst-case scenario by considering the minimum payoff for each decision and then choosing the decision with the highest of these minimum payoffs. This approach ignores the payoffs associated with more favorable states of nature, such as the "high demand" state.

Which of the Following Is a Drawback of the Maximin