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A decision maker faced with four decision alternatives and four sates of nature develops the following profit payoff table.
States of nature
Decision alternative S_1 S_2 S_3 S_4
d_1 14 9 10 5
d_2 11 10 8 7
d_3 9 10 10 11
d_4 8 10 11 13
(a) State and use the average payoff strategy to choose the best decision.
(b) State and use the aggressive strategy to choose the best decision.
(c) State and use the conservative strategy to choose the best decision.
(d) State and use the opportunity loss strategy to make the best decision.
(e) Suppose the decision maker obtains information that enables the following probabilities assessments:
P(s_1) = 0.5; P(s_2) = 0.2; P(s_3) = 0.2; and P(s_4) = 0.1. Use the expected value approach to determine the optimal strategy.
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