Question
The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature. Decision Alternative States of Nature
The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature.
| Decision Alternative | States of Nature | ||
|---|---|---|---|
s1 | s2 | s3 | |
d1 | 270 | 120 | 45 |
d2 | 120 | 120 | 95 |
(a)Construct a decision tree for this problem.
(b)If the decision maker knows nothing about the probabilities of the three states of nature, what is the recommended decision using the optimistic, conservative, and minimax regret approaches?
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Statistical Techniques in Business and Economics
Authors: Douglas A. Lind, William G Marchal
17th edition
1259666360, 978-1259666360
