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Maximax is Risk Seekers
Maximin is Risk Avoiders
Minimax is Risk Avoiders
Expected Value is Risk NeutralSo can we say that all the approaches Maximax; Maximin; Minimax; Expected Values are used to deal with uncertainty where the possible outcome is unknown and probabilities cannot be given but you said in your lecture that EV is used when the outcome is uncertain but with the probabilities are usually given in the expected value! I am confused here.
Is that all true?
The expected value approach is only possible when the probabilities of the various outcomes are known.
If the probabilities are not known, then it would be one of the other approaches depending on the decision makers attitude to risk.
Otherwise what you have written is correct, but never write in the exam that “maximax is risk seekers” because that does not make sense. What you should write in the exam, is that “risk seekers would use a maximax approach” (and the same for the others 🙂 )
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