. A small building contractor has recently experienced two successive years in which work opportunities exceeded the firm’s capacity. The contractor must now make a decision on capacity for next

year. Estimated profits under each of the two possible states of nature are as shown in the table

below. Which alternative should be selected if the decision criterion is:

a. Maximax?

b. Maximin?

c. Laplace?

d. Minimax regret?



Alternative Low High

Do nothing $50* $60

Expand   20   80

Subcontract   40   70

*Profit in $ thousands.