Question

QUESTION 5 A farmer is deciding whether to take precautions to "weather-proof his farm (in case mega typhoons hit it before harvest), "disease-proof" it (in case diseases come out before harvest), do both to "full proof" it (in case both typhoons & diseases hit it), or simply not take precautions and hope that no untoward event happens. The expected payoffs for each course of action under the four scenarios are presented below. a. Typhoons No Diseases Typhoons wl occur hit crops Typhoons & Diseases Diseases Weather Proofing 100,000 50,000 45,000 110,000 Disease Proofing 65,000 90,000 60,000 100,000 Full-proofing 90,000 80,000 70,000 90,000 No precautions 75,000 60,000 20,000 120,000 What are the relevant values for the different options under the Minimax Criterion? Weather-proofing 45,000 Disease-proofing 60,000 Full-proofing 70,000 No precautions 20,000 Weather-proofing 110,000 Disease-proofing 100,000 b. Full-proofing 90,000 No precautions 120,000 Weather-proofing 45,000 Disease-proofing 60,000 Full-proofing 70,000 No precautions 20,000 Weather-proofing 40,000 Disease-proofing 35,000 d. Full-proofing 30,000 No precautions 50,000 с.

Answer 1

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I hope you and your family are safe in this pandemic.

I have solved your question. I have given the explanation. I have attached the images . please find it.

The answers is Option 'd'.

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All the best.
Minimax approach Typhoons oiseases Typhoons w/ Diseases hit crops OCCw NO Typhoons & oiseases Weather prooting 1400,000 50,000 45,000 110,000 Disease proofing 65,000 90,000 60,000 100,000 Full Proofing 90,000 80,000 70,000 90,000 No precautions 75,000 GO,000 20,000 120,000 minimax =) Regret minimizes the maximum regret. opportunity loss = (Best payott)- C payoff received). s For example Typhoon occwy then Best payott is 1,00,000 = then it we go for weather proofing then the regret would be 100,000 - 400,000 = 0 Disease prooting then the regret would be 100,000 - 65,000 = 35,000 =) it we go for Full prooting then the regret would be 10000 90,000 = 10,000 it we go for =) it The go for No precautions then the regret 400,000 - 75,000 =25,000. would be CSScanned with CamScanner

hit crops In the above table all the hoxes values in the boxes we best payout. In the below table i am writing the regrets. Regret Table Typhoons Disease Typhoong no Typhoons & occuy Disajes Disease. weather E120,000 – 400,000|(90,000 (70,000 [120,000 prooting -0) - 50,000 -45,0003| -110,000 Āuo, ovo] =25,000 10,0003 Disease (70,000 (120,000 prooting = 35,000] –90,000 -60,000 - 100,000 = 0] = 10,0003 = 20,0003 (400,000 (90,000 |(70,00 0 C120,000 Full prooting - 90,000 - 80,000 -70,000 90,000 = 10,000] = 10,000) = 0 J lex - 30,000] (100,000 (70,000 (10,000 No precautions 75,000 -60,000 -20,000 - 120,000 = 25,000 ] = 30,000] O] C100,000-65,000 (90,000 (90,000 50,000] Minimax approach =) minimizes the maximum regret it we look into the table. The valves for all options maximum Regret weather proofing = 40,000 oisease prooting - 35,000 Full proofing 30,000 No precautions CSScanned with CamScanner 150,000