August 2004
Intermediate to advanced
656 pages
15h 28m
English
Content preview from Return on Software: Maximizing the Return on Your Software Investment
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The Maximin Rule
The Maximin rule is the most pessimistic of the uncertainty techniques. Maximin assumes that the worst state of nature will happen, so you should pick the alternative that has the best payoff from all of the worst payoffs. The formula for the Maximin rule is as follows:
Under Maximin, find the worst payoff for each alternative. This is shown in Table 25.4.
| Alternative | Worse Economy | Same Economy | Better Economy | Worst Payoff |
|---|---|---|---|---|
| A1 | 0 | 4000 | 2500 | 0 |
| A2 | 1000 | 500 | 4000 | 500 |
| A3 | –2500 | 1500 | 6000 | –2500 |
| A4 | 0 | 1000 | 5000 | 0 |
Choose the alternative with the best of the worst payoffs. In the example, alternative A2 has ...
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