We consider the following decision problem, with 4 decisions di,i∈{1,…,4}, and four possible outcomes ωi,i∈{1,…,4}, with the following table of profits: ω1ω2ω3ω4d13030030d220202020d30501040d415301025 Which decision should be chosen for rewards depending on four different possible outcomes, according to the maximin rule, maximax rule, and optimism-pessimism rule with α<1/3?

A decision problem involves making choices under conditions of scarcity and limited resources. It…

Answered: We consider the following decision…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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We consider the following decision problem, with 4 decisions di,i∈{1,…,4}, and four possible outcomes ωi,i∈{1,…,4}, with the following table of profits:

	ω1	ω2	ω3	ω4
d1	30	30	0	30
d2	20	20	20	20
d3	0	50	10	40
d4	15	30	10	25

Which decision should be chosen for rewards depending on four different possible outcomes, according to the maximin rule, maximax rule, and optimism-pessimism rule with α<1/3?

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