Using the maximax criterion the highest expected payoff is: a) $145
To find the highest expected payoff we would have to take look at the payoff table by looking at each given alternative which is A,B,C to detect the highest expected profit in each payoff table.
In alternative A the highest expected payoff is $145
In alternative B the highest expected payoff is $125
In alternative C the highest expected payoff is $130
Based on this the overall highest expected payoff is $145 because it is the largest of them all.
Therefore the correct option is A.
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The complete question is:
Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.
S1 S2 S3
A $60 $145 $120
B $75 $125 $110
C $95 $85 $130
Refer to the payoff table. Using the maximax criterion, what would be the highest expected payoff?
a. $145
b. $124
c. $120
d. $110
e. $100
