- Decision criterion that focuses on the opportunity loss associated with a decision rather than on its worst possible outcome.
- This decision rule, known as the minimax regret criterion states that the decision maker should minimise the maximum possible regret associated with a wrong decision after the fact. This criterion instructs one to minimise the difference between possible outcomes and the best outcome for each state of nature.
- In game theory, opportunity loss is defined as the difference between a given payoff and the highest possible payoff for the resulting state of nature.
- Opportunity losses result because returns actually received under conditions of uncertainty are frequently lower than the maximum return that would have been possible had perfect knowledge been available beforehand.
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