A local real estate investor in Orlando is considering three alternative investments: a motel, a theater, or a restaurant.
The motel and restaurant will be affected by the availability of gasoline and the number of tourists,
while the theater will be relatively stable under any conditions. The following payoff table shows the profit ( or losses) resulting from each investment.
Investment Shortage Stable Surplus
Motel ($8,000) $15,000 $20,000
Restaurant $2,000 $8,000 $6,000
Theater $6,000 $6,000 $5,000
Determine the best investment using the following decision criteria:
a) Maximax
b) Maximin
c) Minimax regret
d) Hurwicz (a=.4)
e) Equal likelihood
