a local real estate investor in orlando is considering three alternative investments 561603

A local real estate investor in Orlando is considering three alternative investments: a motel, a restaurant, or a theater. Profits from the motel or restaurant will be affected by the availability of gasoline and the number of tourists; profits from the theater will be relatively stable under any conditions.

The following payoff table shows the profit or loss that could result from each investment:

Gasoline Availability

Investment Shortage Stable Supply 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

e. Equal likelihood

Submit a Comment