Exhibit 14.2
The following questions are based on the information below.
An investor is considering 4 investments, A, B, C and leaving his money in the bank. The payoff from each investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following payoff matrix has been developed for the decision problem.
-Refer to Exhibit 14.2. What formula should go in cell H5 and copied to H6:H8 of the Regret Table above to implement the minimax regret decision rule?
A) =MAX(MAX(F5:G5))
B) =MIN(F5:G5)
C) =AVERAGE(F5:G5)
D) =MAX(F5:G5)

Question

Exhibit 14.2
The following questions are based on the information below.
An investor is considering 4 investments, A, B, C and leaving his money in the bank. The payoff from each investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following payoff matrix has been developed for the decision problem. 
-Refer to Exhibit 14.2. What formula should go in cell H5 and copied to H6:H8 of the Regret Table above to implement the minimax regret decision rule?
A) =MAX(MAX(F5:G5)) 
B) =MIN(F5:G5) 
C) =AVERAGE(F5:G5) 
D) =MAX(F5:G5)

Quizplus · Accepted Answer

The correct formula to use in cell H5 and then copy to H6:H8 for a Regret Table to implement the minimax regret decision rule is =MAX(F5:G5). This formula calculates the maximum regret for each action, which is necessary for applying the minimax regret decision rule. This rule suggests choosing the action with the smallest maximum regret.

Exhibit 14.2 The Following Questions Are Based on the Information Below