This payoff matrix gives potential dollar gain values in thousands for strategies S1, S2, S3, and S4 for Sam's Pizza and competitive strategies CA1, CA2, and CA3 for Pam's Pizza. If Sam chooses S4, how is he feeling about the business climate?
A) Sam is feeling optimistic because he has chosen a maximax strategy.
B) Sam is feeling pessimistic because he has chosen a maximin strategy.
C) Sam is feeling optimistic because he has chosen a maximin strategy.
D) Sam is feeling pessimistic because he has chosen a maximax strategy.

Question

This payoff matrix gives potential dollar gain values in thousands for strategies S1, S2, S3, and S4 for Sam's Pizza and competitive strategies CA1, CA2, and CA3 for Pam's Pizza. If Sam chooses S4, how is he feeling about the business climate? 
A) Sam is feeling optimistic because he has chosen a maximax strategy. 
B) Sam is feeling pessimistic because he has chosen a maximin strategy. 
C) Sam is feeling optimistic because he has chosen a maximin strategy. 
D) Sam is feeling pessimistic because he has chosen a maximax strategy.

Quizplus · Accepted Answer

B) Sam has chosen the strategy with the greatest minimum, 12, indicating that he is expecting bad times ahead, so he wants to get the greatest possible low result rather than the greatest possible high result. This reflects a pessimistic outlook on the future.

This Payoff Matrix Gives Potential Dollar Gain Values in Thousands