3. Stevie Stone, a bellhop at the Royal Sundown Hotel in Atlanta, has been offered a management position. Although accepting the offer would assure him a job if there were a recession, if good economic conditions prevailed, he would actually make less money as a manager than as a bellhop (because of the large tips he gets as a bellhop). His salary during the next 5 years for each job, given each future economic condition, is shown in the following payoff table: Economic Conditions Decision Good Recession Bellhop Manager $120,000 $60,000 85,000 85,000 Select the best decision, using the following decision criteria. a. Minimax regret b. Hurwicz ( a = 0.4) c. Equal likelihood
3. Stevie Stone, a bellhop at the Royal Sundown Hotel in Atlanta, has been offered a management position. Although accepting the offer would assure him a job if there were a recession, if good economic conditions prevailed, he would actually make less money as a manager than as a bellhop (because of the large tips he gets as a bellhop). His salary during the next 5 years for each job, given each future economic condition, is shown in the following payoff table: Economic Conditions Decision Good Recession Bellhop Manager $120,000 $60,000 85,000 85,000 Select the best decision, using the following decision criteria. a. Minimax regret b. Hurwicz ( a = 0.4) c. Equal likelihood
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Get the following:
a. Minimax regret
b. Hurwicz (a = 0.4)
c. Equal likelihood
Transcribed Image Text:3. Stevie Stone, a bellhop at the Royal Sundown Hotel in Atlanta, has been offered a
management position. Although accepting the offer would assure him a
were a recession, if good economic conditions prevailed, he would actually make less
money as a manager than as a bellhop (because of the large tips he gets as a bellhop).
His salary during the next 5 years for each job, given each future economic condition,
is shown in the following payoff table:
job if there
Economic Conditions
Decision
Good
Recession
Bellhop
Manager
$120,000
$60,000
85,000
85,000
Select the best decision, using the following decision criteria.
a. Minimax regret
b. Hurwicz ( a = 0.4)
c. Equal likelihood
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