1) You are given the following payoff tyable (in units of thouands of dollars) for a decision analysis problem without probabilities.
STATE OF NATURE
ALTERNATIVE S1 S2 S3
A1 6 4 3
A2 3 4 4
A3 8 1 5
A. Which alternative should be chosen under maximax criterion.
B. Which alternative should be chosen under the maximin criterion?
2) Barbara Miller makes decisions according to Bayes decision rule. For her current problem, Barbara has constructed the following payoff table (in units of hundreds of dollars) and she now wishes to maximixze the expected payoff.
STATE OF NATURE
ALTERNATIVE S1 S2 S3
A1 2X 50 10
A2 25 40 90
A3 35 3X 30
Prior probability 0.4 0.2 0.4
The value of x currently is 50, but there is an opportunity to increase x by spending some money now. What is the maximum amount Barbara should spend to increase x to 75?