QUESTION 1

1. Suppose that a decision maker faced with two decision alternatives (d1 and d2), and

two states of nature (s1 and s2) develops the following profit payoff table:

State of Nature

Decision Alternatives s1 s2

d1 1500 500

d2 780 650

If nothing is known about the probabilities of the two states of nature, what is the

recommended decision using:

a. Optimistic approach

b. Conservative approach

c. minimax regret approach