A person is trying to decide if they should buy a lottery ticket. The ticket costs $2.00. If the ticket is a winner, the prize would be $1,000. Knowing that winning $1,000 is not a certain outcome (state of nature), the person finds that the probability of winning is 0.001. Based on this information, the following payoff table can be constructed: What is the decision using a maximax or optimistic approach?
A) Buy
B) Don't buy
C) Lose
D) Win

Question

A person is trying to decide if they should buy a lottery ticket. The ticket costs $2.00. If the ticket is a winner, the prize would be $1,000. Knowing that winning $1,000 is not a certain outcome (state of nature), the person finds that the probability of winning is 0.001. Based on this information, the following payoff table can be constructed:  What is the decision using a maximax or optimistic approach?
A) Buy 
B) Don't buy 
C) Lose 
D) Win

Quizplus · Accepted Answer

The Answer of A person is trying to decide if they should buy a lottery ticket. The ticket costs $2.00. If the ticket is a winner, the prize would be $1,000. Knowing that winning $1,000 is not a certain outcome (state of nature), the person finds that the probability of winning is 0.001. Based on this information, the following payoff table can be constructed:  What is the decision using a maximax or optimistic approach?
A) Buy 
B) Don't buy 
C) Lose 
D) Win

A Person Is Trying to Decide If They Should Buy