Exhibit 14.1
The following questions are based on the information below.
An investor is considering 4 investments, A, B, C and leaving his money in the bank. The payoff from each investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following payoff matrix has been developed for the decision problem.
-Which one of these is not used in decision-making under risk?
A) minimax regret
B) EVPI
C) EMV
D) decision trees

Question

Exhibit 14.1
The following questions are based on the information below.
An investor is considering 4 investments, A, B, C and leaving his money in the bank. The payoff from each investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following payoff matrix has been developed for the decision problem. 
-Which one of these is not used in decision-making under risk?
A) minimax regret 
B) EVPI 
C) EMV 
D) decision trees

Quizplus · Accepted Answer

Minimax regret is specifically used in decision-making under uncertainty, not risk. Decision-making under risk involves knowing the probabilities of different outcomes, whereas minimax regret is a criterion used when these probabilities are unknown or not considered.

Exhibit 14.1 The Following Questions Are Based on the Information Below