Maximax Criterion Calculator
Instructions: This calculator allows you to use the Maximax criterion (also known as optimistic criterion) to make a decision under uncertainty. Please first indicate the number of decision alternatives and states of nature. Then type the corresponding payoff matrix, and optionally the name of the decision alternatives and states of nature in the form below
The Maximax Criterion
The Maximax criterion, or optimistic criterion is a technique used to make decisions under uncertainty. The setting is for a decision make to be faced to uncertain states of nature and a number of decision alternatives that can be chosen. The decision made and the final state of nature (which the decision maker does not know beforehand) determines the payoff
Under this optimistic criterion, the decision maker calculates the best possible payoff for each decision alternative (among all possible states of nature, for that specific alternative), and then she chooses the decision that has the maximum best possible outcome. So, this method is considering that things will go well, so I will better choose the highest possible best outcome.
This is called the Maximax criterion, because it considers the maximum among the maximum of all possible decision options.
The Maximax criterion is not the only strategy to make decisions under uncertainty. Depending on the risk stance and whether or not the probability of the states of nature are known, there are other alternatives, such as the Maximim criterion (the pessimistic criterion) , Hurwicz's criterion (the realism criterion) , the EMV Criterion , the Minimax Regret , or the Expected Opportunity Loss Criterion , just to mention a few methods.