Consider the following decision table with rewards in $ millions. The opportunity loss for the combination "S₂" and "d₁" is ________. A) 9 B) 5 C) 3 D) 0 E) -1

Question

Quizplus · Accepted Answer

The opportunity loss is calculated by subtracting the maximum reward for a given scenario from the reward of the particular combination. For "S₂" and "d₁", the maximum reward for S is 17 and the maximum reward for d_{1 is 12. Therefore, the opportunity loss for this combination is:
17-12-5 = 0 (since the reward for S₂ is 17 million and the reward for d₁ is 12 million)
Thus, the opportunity loss is 0.

The best choice(s) depend on the decision maker's risk preference. If the decision maker is risk averse, they should choose the option with the highest minimum reward, which is Option 1. If the decision maker is risk neutral, they should choose the option with the highest expected reward, which is Option 2. If the decision maker is risk seeking, they should choose the option with the highest maximum reward, which is Option 3.}

Consider the Following Decision Table with Rewards in $ Millions