Maximin criterion: decision choice method that provides the best of the worst possible outcomes.
- This criterion states that the decision makes should select the alternative that provides the best of the worst possible outcomes.
- This is done by finding the worst possible outcome for each decision alternative and then choosing the option whose worst possible outcome provides the highest payoff,
- This criterion instructs one to maximise the minimum possible outcome.
- Although the maximin criterion suffers from the obvious shortcoming of focusing on the most pessimistic outcome for each decision alternative, it should not be dismissed as naive and unsophisticated.
- The maximin criterion implicitly assumes a very strong aversion to risk and is quite appropriate for decisions involving the possibility of catastrophic outcomes.
- Similarly, if the state of nature that prevails depends on the course of action taken by the decision maker, the maximum criterion might be appropriate.