Question
(No excel needed here) You have the following payoff table for a decision analysis problem. Payoffs are in units of thousands of dollars of profit.
(No excel needed here)
You have the following payoff table for a decision analysis problem. Payoffs are in units of thousands of dollars of profit.
| State of Nature | State of Nature | State of Nature | State of Nature |
Alternatives | S1 | S2 | S3 | S4 |
D1 | 35 | 50 | 45 | 40 |
D2 | 45 | 40 | 30 | 60 |
D3 | 20 | 35 | 40 | 80 |
Which decision alternative would you choose using an optimistic approach?
Which decision alternative would you choose using a conservative approach?
Which decision alternative would you choose using the Minimax Regret approach?
(Assume that P(S1)=0.2, P(S1)=0.1, and P(S3)=0.4 and P(S4)=0.3.) Which decision alternative would you choose using the EV approach?
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