Question

Depending on the weather and the amount of advertising, Kyle has developed six scenarios for his summer profits from his lawn care business. His business has failed to reach his expectations in the past, so he fears the worst

Kyle will likely choose the option that ________.
A) maximizes the maximum possible payoff
B) maximizes the minimum possible payoff
C) minimizes the maximum regret
D) minimizes the minimum losses

Answer 1

Maximizes the minimum possible payoff

Explanation:

Given:

Kyle with business with 6 scenarios developed

To Find:

Which option is best for Kyle.

Solution:

This related to Decision Theory

Depending on option condition check one by one ,as

1)Maximizes the maximum possible payoff.

Which means he has to pay to someone maximum pay which will results in considerably less profit cost.

This will make best of the best which is not considerably good.

2)Minimizes the maximum regert

It is uncertain action for business,it is difference between action of payoff and the best option to payoff so it can be worst option to choose for scenario to be in profit.

3)Minimizes the minimum losses.

If losses are minimum then there is no need to invest the scenario on that basis.

4)Maximizes the minimum possible payoff

This payoff is called as maximin which looks for worst and chooses to make largest payoff. They will make best of the worst.