Given the following payoff table with the profits ($m), a firm might expect alternative investments (A, B, C) under different levels of interest rate (attached) (a) Which alternative should the firm choose under the maximax criterion? (b) Which option should the firm choose under the maximin criterion? (c) Which option should the firm choose under the LaPlace criterion? (d) Which option should the firm choose with the Hurwicz criterion with α = 0.2? (e) Using a minimax regret approach, what alternative should the firm choose? (f) Economists have assigned probabilities of 0.35, 0.3, and 0.35 to the possible interest levels 1, 2, and 3 respectively. Using expected monetary values, what option should be chosen and what is that optimal expected value? (g) What is the most that the firm should be willing to pay for additional information? Use Expected Regret (h) Use the alternative method to verify EVPI
Given the following payoff table with the profits ($m), a firm might expect alternative investments (A, B, C) under different levels of interest rate (attached)
(a) Which alternative should the firm choose under the maximax criterion?
(b) Which option should the firm choose under the maximin criterion?
(c) Which option should the firm choose under the LaPlace criterion?
(d) Which option should the firm choose with the Hurwicz criterion with α = 0.2?
(e) Using a minimax regret approach, what alternative should the firm choose?
(f) Economists have assigned probabilities of 0.35, 0.3, and 0.35 to the possible interest levels 1, 2, and 3 respectively. Using expected monetary values, what option should be chosen and what is that optimal expected value?
(g) What is the most that the firm should be willing to pay for additional information? Use Expected Regret
(h) Use the alternative method to verify EVPI
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