Concept explainers
For the following payoff table, the
a. Determine the optimal action based on the maximax criterion.
b. Determine the optimal action based on the maximin criterion.
c. Compute the expected monetary value (EMV) for actions A and B.
d. Compute the expected opportunity loss (EOL) for actions A and B.
e. Explain the meaning of the
f. Based on the results of (c) or (d). which action would you choose? Why?
g. Compute the coefficient of variation for each action.
h. Compute the return-to-risk ratio (RTRR) for each action.
i. Based on (g) and (h), what action would you choose? Why?
j. Compare the results of (f) and (i) and explain any differences.
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