Minimal Regret Criterion:

This method seeks to minimize the maximum regret that would occur from choosing a particular strategy or alternative. 

The regret is the opportunity loss that occurs from taking one decision given that a certain contingency occurs.

For each state of nature:
Opportunity loss = Max pay off – Payoff under each alternative

Decision:
Set a price of Sh.4.00 since it minimizes the maximum regret

Methods of Decision Making Under Risk:
In this environment, it is possible to attach probabilities to the various states of nature.  The decision criteria would either be:

• The expected monetary value
• The expected opportunity loss

The two criteria are same as the choice that maximizes the expected monetary value also minimizes the expected opportunity loss (EOL).