State of nature decision S1 S2 S3 D1 250 750 500 D2 300 -250 1200 D3 500 500 600
ID: 401560 • Letter: S
Question
State of nature
decision
S1
S2
S3
D1
250
750
500
D2
300
-250
1200
D3
500
500
600
the above is the payoff table.
1-what choice should be made by the optimistic decision maker?
2-what choice should be made by the conservative decision maker ?
3-what choice should be made under minimax regret?
4-If the probabilities of D1 ,D2 and D3 are 0.2 ,0.5,and 0.3, respectively,then what choice should be made under expected value?
5- what is the EVPI?
State of nature
decision
S1
S2
S3
D1
250
750
500
D2
300
-250
1200
D3
500
500
600
Explanation / Answer
a. d2 ================================================================ b. d3 ================================================================ c. d1 ================================================================ d. EV(d1) = 695 (the best) EV(d2) = 385 EV(d3) = 500
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