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Expected opportunity loss criterion

Author:
January 25th, 2023

See the attached file.

The following is an opportunity-loss table.

Opportunity-loss table.
State of Natures
Alternatives A B C
Alternative 1 20 100 0
Alternative 2 100 0 25
Alternative 3 0 40 90

The probabilities for the states of nature A, B, and C are 0.3, 0.5, and 0.2, respectively. If a person were to use the expected opportunity loss criterion, what decision would be made?

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