For the following payoff table, the probability of event 1 is 0.8, the probability of event 2 is 0.1, and the probability of event 3 is 0.1:

..........................Action

Event......... A ($) ..........B ($)

1 ...................50............ 10

2 ..................300.......... 100

3 ..................500.......... 200

a. Determine the optimal action based on the maximax criterion.

b. Determine the optimal action based on the maximin criterion.

c. Compute the expected monetary value (EMV) for actions A and B.

d. Compute the expected opportunity loss (EOL) for actions A and B.

e. Explain the meaning of the expected value of perfect information (EVPI) in this problem.

f. Based on the results of (c) or (d), which action would you choose? Why?

g. Compute the coefficient of variation for each action.

h. Compute the return-to-risk ratio (RTRR) for each action.

i. Based on (g) and (h), what action would you choose? Why?

j. Compare the results of (f) and (i) and explain any differences.

k. Would your answers to (f) and (i) be different if the probabilities for the three events were 0.1, 0.1, and 0.8, respectively? Discuss.