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Using maxi-max to choose an investment option

An investor is consider 4 different opportunities, A, B, C, or D. The payoff for each opportunity will depend on the economic conditions, represented in the payoff table below.

Economic Condition

Poor Average Good Excellent

Investment (S1) (S2) (S3) (S4)

A 50 75 20 30

B 80 15 40 50

C 100 300 50 10

D 25 25 25 25

What decision would be made under maximax?

Solution Preview

According to the maximax strategy, the option that you would choose under the given circumstances would be to give you the maximum possible gain, regardless of ...

Solution Summary

Four different investment options are given for certain economic conditions. Maxi-max is used to make the investment choice.

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