7 Maximax, maximin and minimax regret When probabilities are not available, there are still tools available for incorporating risk into decision making.
7.1 Maximax
The maximax rule applies to an optimist who seeks to maximise the maximum possible gain of possible outcomes.
Illustration 10 – Applying maximax
A company is choosing which of three new products to make (A, B or C) and has calculated likely pay-offs under three possible scenarios (Ⅰ, Ⅱ, or Ⅲ), giving the following pay-off table.
Profit/(loss)Product chosen
ScenarioABCwww.Examw.com
Ⅰ208010
Ⅱ4070100
Ⅲ50(10)40
Using maximax, an optimist would consider the best possible outcome for each product and pick the product with the greatest potential.
Here C would be chosen with a maximum possible gain of 100. |
发表于 2012-2-23 17:09:42
