Decision criterion-alterntive for optimistic decision maker

Reference no: EM13116920

kenneth brown is the principal owner of brown oil inc. After quitting his university teaching job. ken has been able to increase this annual salary by a factor of over 100. at the present time, ken is forced to consider purchasing some more equipment for brown oil because of competition. his alternatives are shown in the following table

equipment favorable market ($) unfavorable market ($)

sub 100 300,000 - 200,000
oiler J 250,000 - 100,000
texan 75,000 -18,000

for example, if ken purchases a sub 100 and if there is a favorable market, he will realize a profit of $300,000. On the other hand, if the market is unfavorable. ken will suffer a loss of $200.000. But ken has always been a very optimistic decision maker.

(a) what type of decision is ken facing?
(b) what decision criterion should be use?
(c) what alterntive is best?

Reference no: EM13116920

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