Maximin, maximax and minimax regret
In this lesson, you'll learn three decision-making rules used when facing uncertainty: maximin (choosing the option with the best worst-case outcome), maximax (choosing the option with the best possible outcome), and minimax regret (minimising the potential loss from making the wrong choice).
This lesson is part of a paid course
Buy the course to unlock every video lesson and the AI Tutor, plus mock exams with feedback on CIMA courses.
Already bought? Sign in
Ask the AI tutor anything about this lesson
It knows every lesson in the course — explanations, clarifications, practice questions.
In this lesson
- 0:00 Maximin, Maximax and Minimax Regret
- 0:27 Maximin Rule: Maximising the Minimum
- 1:01 Maximax Rule: Choosing the Best Outcome
- 1:12 Minimax Regret: Minimising Decision Regret
- 2:14 Pub Beer Order Decision Problem
- 4:09 Applying Maximin to the Payoff Table
- 5:10 Applying Maximax to the Payoff Table
- 5:51 Minimax Regret: Building the Regret Table
About this lesson
These methods are essential for Performance Management and Strategic Business Leader papers, where you'll need to evaluate decisions under different scenarios. Using a practical example of a pub deciding beer order quantities under different weather conditions, you'll work through payoff tables to apply each rule and understand when to use them—maximin for risk-averse decision makers, maximax for optimistic ones, and minimax regret when you want to minimise the downside of being wrong. By the end, you'll be confident selecting the right decision rule for exam questions and real-world scenarios.
Duration: 8m
Transcript
Every lesson comes with a full searchable transcript - included with the course.
Get the Performance Management course
All 87 video lessons, an AI Tutor in every lesson and lifetime access.
Already bought? Sign in