Instructions: This calculator allows you to use the Maximin criterion (also known as pessimistic 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 Maximin Criterion
The Maximin criterion, or pessimistic 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 pessimistic criterion, the decision maker calculates the worst 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 worst possible outcome. So, this method is considering that things will go badly, so I will better choose the highest possible worst outcome.
This is called the Maximin criterion, because it considers the maximum among the minimum 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 Maximax criterion (the optimistic criterion), the Hurwicz criterion (the realism criterion), the EMV Criterion Method, the Minimax Regret criterion, or the Expected Opportunity Loss (EOL) Method, just to mention a few.
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