can you answer these 3 related questions Consider the following payoff (profit)

Question

can you answer these 3 related questions

Consider the following payoff (profit) table Which action would an optimistic(maximax) decision maker choose? Which action would a pessimistic(maximin) decision maker choose? Consider the same payoff (profit) table given in question 2. Assume also that the probabilities of the three states of natures are given as follows. What is the best alternative using the expected monetary value analysis? Compute the Expected Value of Perfect Information Consider the statement given in question 3. What is the best alternative using the expected opportunity loss analysis?

Explanation / Answer

2. a)

Maximax = 50

b)

Maximin = 10

3. a)

EMV = 21 (action A)
b) EVPI = EVwithPI - EVwithoutPI

= EVwithPI - maximu EMV

=  EVwithPI - 21

= 10*0.5 + 0.3*30 + 0.2*50 - 21 = 83.5

5.

Maximax Criteria Action 1 2 3 Maximum A 10 20 50 50 B 5 30 40 40

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