(c) Maximin and expected value decision rules The ‘maximin’ decision rule looks at the worst possible outcome at each supply level and then selects the highest one of these. It is used when the outcome cannot be assessed with any level of certainty. The decision maker therefore chooses the outcome which is guaranteed to minimise his losses. In the process, he loses out on the opportunity of making big profits. It is often seen as the pessimistic approach to decision-making (assuming that the worst outcome will occur) and is used by decision makers who are risk averse. It can be used for one-off or repeated decisions.The ‘expected value’ rule calculates the average return that will be made if a decision is repeated again and again. It does this by weighting each of the possible outcomes with their relative probability of occurring. It is the weighted arithmetic mean of the possible outcomes.Since the expected value shows the long run average outcome of a decision which is repeated time and time again, it is a useful decision rule for a risk neutral decision maker. This is because a risk neutral person neither seeks risk or avoids it; they are happy to accept an average outcome. The problem often is, however, that this rule is often used for decisions that only occur once. In this situation, the actual outcome is unlikely to be close to the long run average. For example, with Cement Co, the closest actual outcome to the expected value of $1,172,000 is the outcome of $1,085,000. This is not too far away from the expected value but many of the others are really different.

【特许公认会计师(ACCA/CAT)试题参考】相关文章：

1.公认的解释及造句

2.A cute Cat英语作文

3.我的猫咪(My cat)

4.动物英语作文：The bird and cat

5.注册会计师考试试题参考

6.中级会计师会计实务单项选择题试题参考

7.会计师考试试题及答案参考

8.鸭公公认信的故事