The laplace method, Mathematics

Assignment Help:

The Laplace method

Laplace method employs all the information by assigning equal probabilities to the possible payoffs for every action and then selecting such alternative which corresponds to the maximum expected pay off

Illustration

A company is considering investing in one of three investment opportunities A, B and C under specific economic conditions. The payoff matrix for this condition is economic situation

 

Investment opportunities

1 £

2 £

3 £

A

5000

7000

3000

B

-2000

10000

6000

C

4000

4000

4000

 

Find out the best investment opportunity by using the given criteria:

i.     Maximax

ii.     Maximin

iii.    Minimax

iv.   Hurwicz as Alpha = 0.3

Solution

                                          Economic condition

Investment opportunities

1 £

2 £

3 £

Minimum £

Maximum £

A

5000

7000

3000

3000

7000

B

-2000

10000

6000

-2000

10000

C

4000

4000

4000

4000

4000

 

i.        By using the Maximin rule Highest minimum = £ 4000

Select investment C

ii.      By using the Maximax rule Highest maximum = £ 10000

Select investment B

iii.    Minimax Regret rule

 

 

1

2

3

Maximum regret

A

0

3000

3000

3000

B

7000

0

0

7000

C

1000

6000

2000

6000

 

Select the minimum of the maximum regret that is £3000

Select investment A

iv.     Hurwicz rule: expected values

For A (7000 x 0.3) + (3000 x 0.7) = 2100 + 2100 = £4200

For B (10000 x 0.3) + (-2000 x 0.7) = 3000 + 1400 = £ 1600

For C (4000 x 0.3) + (4000 x 0.7) = 1200 + 2800 = £ 4000

Best outcome is £ 4200 select investment A


Related Discussions:- The laplace method

Shiites muhammad''s flight from mecca to medina, The first year of the Isla...

The first year of the Islamic calendar marks the following event: The birth of Muhammad The Qu'ran is assembled into a single sacred text The division of the Sunnis and the Shiites

On income and return from shares, a company declares a semu annual dividend...

a company declares a semu annual dividend on 5%.a man has 400 shares of the company.if his annual income from the share is rs 1000 find the face value of each share?

Explain id amortisation is proper impairment will not arise, If depreciatio...

If depreciation/amortisation is done properly, impairment adjustments will not arise.   Required: Do you agree with the above statement? Critically and fully explain your

Math 533, Project part A, part B, part C

Project part A, part B, part C

Pemdas, 15(4*4*4*4*+5*5*5)+(13*13*13+3*3*3)

15(4*4*4*4*+5*5*5)+(13*13*13+3*3*3)

Multiplication of two complex numbers, Multiply the given below and write t...

Multiply the given below and write the answer in standard form. (2 - √-100 )(1 + √-36 ) Solution If we have to multiply this out in its present form we would get,  (2 -

Managment Science, Classify models based on the degree of their abstraction...

Classify models based on the degree of their abstraction, and provide some examples of such models.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd