do test only use techniqes found in files
roberto pulpo
Decisiontheory1QUAN4630sept24.xlsxBasic
| Payoff matrix (revenue) | high revenues are desirable | |||
| states of nature | ||||
| alternative | good weather | bad weather | max | min |
| outdoor venue | 10,000 | 3000 | 10,000 | 3,000 |
| indoor venue | 7000 | 3500 | 7,000 | 3,500 |
| do nothing | 0 | 0 | 0 | 0 |
| aggressive | maximax | 10,000 | outdoor venue | |
| conservative | maximin | 3,500 | indoor venue |
Prob
| Payoff matrix (revenue) | |||
| states of nature | |||
| alternative | good weather | bad weather | EV |
| outdoor venue | 10,000 | 3000 | 3700 |
| indoor venue | 7000 | 3500 | 3850 |
| do nothing | 0 | 0 | 0 |
| prob | 0.1 | 0.9 | |
| max EV | 3850 | indoor venue |
Regret
| Payoff matrix (revenue) | Regret matrix (revenue) | |||||||
| states of nature | states of nature | |||||||
| alternative | good weather | bad weather | alternative | good weather | bad weather | max | ||
| outdoor venue | 10,000 | 3000 | outdoor venue | 0 | 500 | 500 | ||
| indoor venue | 7000 | 3500 | indoor venue | 3,000 | 0 | 3,000 | ||
| do nothing | 0 | 0 | do nothing | 10,000 | 3500 | 10,000 | ||
| minimax regret | 500 | outdoor venue |
Minimizing payoffs
| regret matrix (cost) | |||||||||||||
| Payoff matrix (cost) | low costs are desirable | ||||||||||||
| states of nature | states of nature | ||||||||||||
| alternative | rates rise | rates stable | rates fall | min | max | alternative | rates rise | rates stable | rates fall | max | |||
| 1-yr ARM | 61,000 | 46,000 | 40,000 | 40,000 | 61,000 | 1-yr ARM | 6,400 | 0 | 0 | 6,400 | |||
| 3-yr ARM | 56,900 | 51,000 | 46,700 | 46,700 | 56,900 | 3-yr ARM | 2,300 | 5,000 | 6,700 | 6,700 | |||
| 30-yr fixed rate | 54,600 | 54,600 | 54,600 | 54,600 | 54,600 | 30-yr fixed rate | 0 | 8,600 | 14,600 | 14,600 | |||
| aggressive | minimin | 40,000 | 1-yr ARM | ||||||||||
| conservative | minimax | 54,600 | 30-yr fixed rate | ||||||||||
| minimax regret | 6,400 | 1-yr ARM |
