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2018-08-09

Decision-making teaching: The Maximin-rule is for the pessimist

In the case of the Maximin procedure selects the Alternative that brings in the worst case, the best result. One thus determines for each Alternative the worst possible outcome, the Minimum, and compares the Minima. One chooses the Alternative with the highest Minimum (the Maximum of the Minimums), so here is Alternative 1 with the Minimum of 20. The u-values represent the environmental conditions.

The decision maker is extremely risk averse and pessimistic, because it assumes, in principle, from the worst possible condition. It is also unfortunate that only a result in the evaluation of the Alternative comes in, namely, the worst. The is the scatter senseless, the further the results. In the example, States: in the case of Alternative 3, in the case of three kinds of Environment, the Chance to get a very good result of 90 and more. Nevertheless, only the result of -25 is used in the assessment.

In the above example it was assumed that the Numbers in the Matrix represent the utility of the Alternatives, i.e., a higher number is better than a lower. Then, one looks for the maximum Minimum of the benefits: Maximin! You can also set up a damage matrix. Then represents a higher number a higher damage and the Minimum of the maximum damage to: Minimax! Also in this case, the Alternative 1 is the best, because a1 is the maximum damage of 50, in the case of a2 120 a3 110.

Such extremely risk-averse decision-making can be useful if the possible damages are very severe and irreversible. In the search for a possible Repository for nuclear waste, one should for example. the Alternative is to choose the even with the worst possible environmental developments (eg. Earthquake) leads to relatively low damage.

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