Stanley E. Konomist, the chief financial officer for Breverham State University (BSU), must decide how to invest this year’s private contributions. Stanley has four options. He can invest in corporate bonds, in the stock market, in treasury notes, or in land. The payoff is affected by the rate of inflation for the next year, as the accompanying table shows. Using maximin, maximax, minimax regret, and the principle of insufficient reason, what should Stanley do? Which is the most appropriate criterion?

 

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BSU Options Corporate bonds Stock market Treasury notes Land 0% -4% $75K $60K $100K $30K Inflation Rate 4%-10% $70K $120K $80K $90K 10%+ $70K $45K $60K $150K