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Suppose that a decision maker faced with four decision alternatives and four states of nature develops the following profit payoff table: State of Nature Decision
Suppose that a decision maker faced with four decision alternatives and four states of nature develops the following profit payoff table:
State of Nature
Decision Alternative
a If the decision maker knows nothing about the probabilities of the four states of nature, what is the recommended decision using the optimistic, conservative, and minimax regret approaches?
b Which approach do you prefer? Explain. Is establishing the most appropriate approach before analyzing the problem important for the decision maker? Explain.
c Assume that the payoff table provides cost rather than profit payoffs. What is the recommended decision using the optimistic, conservative, and minimax regret approaches?
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