Question

(Show work & show 5 techniques (Maximax, Maximin, Hurwics (A=.7), LaPlace, and Minimax Reget.

Mickey Lawson is considering investing some money that he inherited. The following payoff table gives the profits that would be realized during the next year for each of three investment alternatives Mickey is considering:

a. What decision would maximize expected profits?

b. What is the maximum amount that should be paid for a perfect forecast of the economy?

	State of Nature
Decision Alternative	Good Economy	Poor Economy
Stock Market	80,000	-20,000
Bonds	30,000	20,000
CDs	23,000	23,000
Probability	0.5	0.5

Answer 1