Numericals on Decision Theory

1.         For the pay – off matrix given below, find best course of action using :

(i)         EMV criterion            (ii)        EOL criterion             (iii)       Maximin criterion

(iv)       Maximax criterion     (v)        Laplace criterion      (vi)       Minimax Regret

(Ans. Maximum = 50, Maximum = 1500, Laplace = 780, Maximum = 70)

2.         The following table is pay off of four alternative plans under each of five possible states of nature.

(i)      Obtain   (a)       maximin and             (b)       maximax        (c)        Laplace solution

(ii)     Further find the regret table and obtain Minimax solution

(iii)    If =0.6 obtain Hurwitz solution for the pay off table.

(Ans.  :   (i) P₂,  (ii)  P₁,   (iii)  P₁,  (iv)  P₂,   (v)  P₂)