Consider the following decision table with rewards in $ millions. $\begin{array}{r}\text { State of Nature }\\\begin{array}{|c|c|c|c|}\hline \text { Decision Alternatives } & S_{1} & S_{2} & S_{3} \\\hline d_{1} & -1 & 2 & 8 \\\hline d_{2} & -3 & 7 & 5 \\\hline d_{3} & -0.5 & 0.75 & 1 \\\hline d_{4} & 0 & 0 & 0 \\\hline d_{5} & -1 & -1 & -1\\\hline\end{array}\end{array}$
Using the maximin criterion, the appropriate choice would be __________.

Question

Consider the following decision table with rewards in $ millions.

\begin{array}{r}\text { State of Nature }\\\begin{array}{|c|c|c|c|}\hline \text { Decision Alternatives } & S_{1} & S_{2} & S_{3} \\\hline d_{1} & -1 & 2 & 8 \\\hline d_{2} & -3 & 7 & 5 \\\hline d_{3} & -0.5 & 0.75 & 1 \\\hline d_{4} & 0 & 0 & 0 \\\hline d_{5} & -1 & -1 & -1\\\hline\end{array}\end{array}

Using the maximin criterion, the appropriate choice would be __________.

Quizplus · Accepted Answer

The maximin criterion involves selecting the decision alternative with the highest minimum payoff. In this case, the minimum payoff for each decision alternative is as follows: d1: -1 d2: -3 d3: -0.5 d4: 0 d5: -1 Thus, the maximum of these minimum payoffs is 0, which is achieved by choosing decision alternative d4. Therefore, the appropriate choice using the maximin criterion is d₄.

Consider the Following Decision Table with Rewards in $ Millions