PART 2c : Decisions under ignorance:

PART 2c: Decisions under ignorance: optimism-pessimism rule

(1) Following the discussion of the optimism-pessimism rule on pages 32 - 35, provide the a-indexes for all acts in tables 2-23 and 2-24 on page 34 (let a = ½).

Hint: your answer should include 2 diagrams with 2 a-indexes for each diagram.

(2) Using the same tables 2-23 and 2-24, state which acts the rule picks out when a = ¾ and when a = ¼. Explain why the rule picks out different acts when the value of 'a' changes and explain why ordinal transformations do not preserve consistency?

Hint: your answer should include 4 diagrams (2 diagrams for set of values for 'a') and 2 a-indexes for each of the 4 diagrams (8 in total).