A former White House aide, who is now the owner of a Washington lobbying firm, is trying to decide whether to hire one, two, or three assistant lobbyists. He estimates that profits next year (in thousands of dollars) will vary with demand for his lobbying services as follows:
Demand
# of Assistants low medium high
One 0 575 255
Two 250 360 650
Three 195 200 355
If he uses the maximax criterion, how many assistants will he decide to hire?
If he uses the maximin criterion, how many assistants will he decide to hire?
If he uses the Laplace criterion, how many assistants will he decide to hire?
If he uses the minimax regret criterion, how many assistants will he decide to hire?
If he feels the chances of low, medium, and high demand are 50%, 20%, and 30% respectively, what are the expected annual profits for the number of assistants he will decide to hire?
If he feels the chances of low, medium, and high demand are 50%, 20%, and 30% respectively, what is the expected value of perfect information?
