Expected Opportunity Loss (EOL) : One more way of maximizing monetory value is to minimize the expected opportunity loss or expected value of regret. The conditional EOL or regret function for a particular course of action is determined by taking the difference between payoff value of the most favourable course of action i.e. maximum pay off and pay off for each. Course of action for given state of nature. Then similar to EMV, EOL for each course of action is usm of product of probabilities and corresponding opportunity loss for ith state of nature and jth course of action.
Then, EOL due to jth action is EOL (Aj) = e1j P(S1) + e2j P(S2) + … + emj P(Sm)
For j = 1, 2, …, n actions.
And probability of occurrence P(si) of state of nature si. The optimal course of action will always be the course of the action that has the minimum EOL.
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