Hurwicz Criterion: Determine a of “coefficient optimism” For each row, compute α. α max payoff plus (1-α) times min payoff. Choose the best (max) of these Hurwicz calculations. The of lies between 0 and 1, with higher values α meaning optimistic.” The Hurwicz Criterion “more is equivalent to Maximin when = 0, and it’s α equivalent to Maximax when = 1. α No Medium Large Hurwicz Center Center Center Calculation Residential $4 $16 $12 Commercial #1 $5 $6 $10 Commercial #2 ($1) $4 $15 No Medium Hurwicz Center Center Center Calculation Residential $4 $16 $12 Commercial #1 $5 $6 $10 Commercial #2 ($1) $4 $15
Hurwicz Criterion: Determine a “coefficient of optimism” α. For each row, compute α max payoff plus (1-α) times min payoff. Choose the best (max) of these Hurwicz calculations. The of α lies between 0 and 1, with higher values meaning “more optimistic.” The Hurwicz Criterion is equivalent to Maximin when α = 0, and it’s equivalent to Maximax when α = 1. No Medium Large Hurwicz Center Center Center Calculation Residential $4 $16 $12 Commercial #1 $5 $6 $10 Commercial #2 ($1) $4 $15 No Medium Hurwicz Center Center Center Calculation Residential $4 $16 $12 Commercial #1 $5 $6 $10 Commercial #2 ($1) $4 $15
MgtOp-470-Topic-8.docx