Question

Why are the maximin, maximax regret models appropriate for decision making under conditions of high uncertainty but NOT appropriate when some conditions and probabilities have a moderate level of certainty or predictability?

Answer 1

Answer :

given data :-

the maximin, maximax regret models appropriate for decision making under conditions of high uncertainty but NOT appropriate when some conditions and probabilities have a moderate level of certainty or predictability :-

Maximax (Optimist) :-

The maximax takes a gander at as well as could be expected occur under each activity and after that picks the activity with the biggest esteem. They expect that they will get the most conceivable and afterward they make the move with the most ideal situation. The limit of the maximums or the "most elite". This is the lotto player; they see substantial settlements and disregard the probabilities.

Maximin (Pessimist) :-

The maximin individual takes a gander best case scenario that could occur under each activity and afterward pick the activity with the biggest result. They accept that the most exceedingly terrible that can happen will, and afterward they make the move with the best most dire outcome imaginable. The limit of the essentials or the "best of the most exceedingly bad". This is the individual who puts their cash into a bank account since they could lose cash at the securities exchange.

Minimax (Opportunist)

Minimax basic leadership depends on crafty misfortune. They are the benevolent that thinks back after the condition of nature has happened and state "Since I recognize what occurred, on the off chance that I had just picked this other activity rather than the one I really did, I could have improved the situation". In this way, to settle on their choice (before the occasion happens), they make a shrewd misfortune (or lament) table. At that point they take the base of the most extreme. That sounds in reverse, yet recall, this is a misfortune table. This like the maximin guideline in principle; they need the best of the most exceedingly bad misfortunes.

We can contrast contrasts and the assistance of the accompanying precedents:

For instance, assume Geoffrey Ramsbottom is looked with the accompanying result table. He needs to pick what number of servings of mixed greens to make ahead of time every prior day he knows the real interest.

His decision is between 40, 50, 60 and 70 servings of mixed greens.

The real interest can likewise fluctuate between 40, 50, 60 and 70 with the probabilities as appeared in the table - for example P(demand = 40) is 0.1.

The table at that point demonstrates the benefit or misfortune - for instance, on the off chance that he makes 70 yet interest is just 50, at that point he will make lost $60.

The inquiry is then which yield level to pick.

Maximax

The maximax rule includes choosing the elective that amplifies the most extreme result accessible.

This methodology would be appropriate for a self assured person, or 'hazard chasing' financial specialist, who looks to accomplish the best outcomes if the best occurs. The chief who utilizes the maximax standard is accepting that whatever move is made, the best will occur; he/she is a daring individual. All in all, what number of plates of mixed greens will Geoffrey choose to supply?

Taking a gander at the result table, the most elevated greatest conceivable result is $140. This occurs on the off chance that we make 70 servings of mixed greens and request is likewise 70. Geoffrey should, in this manner, choose to supply 70 servings of mixed greens each day.

Maximin

The maximin rule includes choosing the elective that boosts the base result attainable. The financial specialist would take a gander even under the least favorable conditions conceivable result at each supply level, at that point chooses the most noteworthy one of these. The leader, in this way, picks the result which is ensured to limit his misfortunes. Simultaneously, he misses out on the chance of making huge benefits.

This methodology would be suitable for a cynic who looks to accomplish the best outcomes if the most noticeably awful occurs.

All in all, what number of plates of mixed greens will Geoffrey choose to supply? Taking a gander at the result table,

On the off chance that we choose to supply 40 servings of mixed greens, the base result is $80.

On the off chance that we choose to supply 50 servings of mixed greens, the base result is $0.

In the event that we choose to supply 60 plates of mixed greens, the base result is ($80).

On the off chance that we choose to supply 70 servings of mixed greens, the base result is ($160).

The most noteworthy least result emerges from providing 40 servings of mixed greens. This guarantees the most noticeably awful conceivable situation still outcomes in an increase of at any rate $80.

Minimax lament

The minimax lament system is the one that limits the most extreme lament. It is helpful for a hazard nonpartisan chief. Basically, this is the procedure for a 'sore washout' who don't wish to settle on the wrong choice.

'Lament' in this setting is characterized as the open door misfortune by having settled on the wrong choice.

To settle this a table appearing size of the lament should be developed. This implies we have to locate the greatest result for each interest push, at that point subtract every single other number in this line from the biggest number.

For instance, if the interest is 40 plates of mixed greens, we will make a most extreme benefit of $80 in the event that they all move. On the off chance that we had chosen to supply 50 plates of mixed greens, we would accomplish a nil benefit. The distinction or 'lament' between that nil benefit and the limit of $80 reachable for that push is $80.

The most extreme second thoughts for every decision are consequently as pursues (perusing down the sections):

In the event that we choose to supply 40 servings of mixed greens, the greatest lament is $60.

In the event that we choose to supply 50 plates of mixed greens, the most extreme lament is $80.

On the off chance that we choose to supply 60 plates of mixed greens, the greatest lament is $160.

On the off chance that we choose to supply 70 plates of mixed greens, the greatest lament is $240.

A director utilizing the minimax lament model would need to limit that most extreme lament and along these lines supply 40 servings of mixed greens as it were.