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In a solution kit,
They said
If he is a “sore loser”, then the minimax regret approach suggest.Would you please explain for me the meaning of ” sore loser”, I look up the dictionaty and found ” sore loser” is a kind of bad behavior, not fair play behaviour after losing a match..
And i really stuck in understanding this sentence, and why mimiax regret is suitable for “sore losser”In my understanding, Risk neutral is only take care about the highest return and regardless of risk, so Expected value is suitable for them because it dictates the highest value return option and ingore the range of possible out come with assigned probability.( average value)
but in the solution kit they said : IF they like longterm -reuslt rather than shorterm with uncertainty assigned. They will choose the EV, Wolud you explain for me the relationship between EV with longterm outcome.I don’t know which book you read it in, but the wording is terrible!!
(what you found about ‘sore loser’ is true and really is not applicable to decision making under uncertainty).
What you have written about expected value approach is not correct.The real explanation of all the terms is as follows:
Maximin – is a risk avoider (they are making sure they get the best of the worst results whatever happens, even though they are missing out on the possibility of getting much better).
Maximax – this is a risk seeker. They are aiming for the best possible return, but taking a risk that they may end up with the worst result.
Minimax regret – this is again a risk avoider. It is very difficult to explain why in a few words – they are comparing the various returns with each other. If you watch my free lecture, there I do explain in detail what it is and why it is a risk avoider.
Expected value – this is risk neutral. The decision is based on the average and ignores the fact that it might be higher or might be lower. As an example of this, suppose one option gave either 140 or 160 with 50% probabilities of each – the expected value would be 150. Suppose another one gave 100 or 200 with 50% probabilities of each – again the expected value would be 150.
So on expected values you would be indifferent between the two. However this is ignoring the fact that the actual return might be a lot higher or a lot lower with the second choice – it is ignoring the risk.
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