QUESTION 2 The manager of AGO Corporation must decide whether to hire 1, 2, or 3 new workers. He estimates that net revenues will vary with how well taxpayers comply with the new tax code. Decision (strategy) Number of workers 1 2 3 State of nature (Degree of Compliance) Medium Low 50 100 150 50 60 70 High 50 20 -10 1. If the manager uses the minimax regret approach, how many new workers will he hire? 2. If the manager is optimistic, how many new workers will he hire? 3. If the investor is conservative, how many new workers will he hire?

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Your Question:
QUESTION 2
The manager of AGO Corporation must decide whether to hire 1, 2, or 3 new workers.
He estimates that net revenues will vary with how well taxpayers comply with the new
tax code.
Decision (strategy)
Number of workers
1
2
3
State of nature
(Degree of Compliance)
Medium
Low
50
100
150
50
60
70
High
50
20
-10
1. If the manager uses the minimax regret approach, how many new workers will he
hire?
2. If the manager is optimistic, how many new workers will he hire?
3. If the investor is conservative, how many new workers will he hire?
Transcribed Image Text:QUESTION 2 The manager of AGO Corporation must decide whether to hire 1, 2, or 3 new workers. He estimates that net revenues will vary with how well taxpayers comply with the new tax code. Decision (strategy) Number of workers 1 2 3 State of nature (Degree of Compliance) Medium Low 50 100 150 50 60 70 High 50 20 -10 1. If the manager uses the minimax regret approach, how many new workers will he hire? 2. If the manager is optimistic, how many new workers will he hire? 3. If the investor is conservative, how many new workers will he hire?
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