The following is a payoff table giving profits for varioussituations.
States of Nature Alternatives A B C D
Alternative 1 120 140 170 160
Alternative 2 210 130 140 120
Alternative 3 120 140 110 190
Do Nothing 0 0 0 0
a. What decision would a pessimist make?
b. What decision would an optimist make?
c. What decision would be made based on the realism criterion,where the coefficient of realism is 0.60?
d. What decision would be made based on the equally likelycriterion?
e. What decision would be made based on the minimax regretcriterion? Suppose now that the probabilities of the 4 states ofnature are known, that is, the probability to observe A is 30%, theprobability to observe B is 35%, the probability to observe C is20%, and the probability to observe D is 15%. Answer thefollowing
f. What decision would be made based on the expected monetaryvalue?
g. What is the EVPI
