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Risk and Uncertainty

Maximax, maximin and minimax regret

6.1 Maximax

The maximax rule involves selecting the alternative that maximises the
maximum payoff achievable.

This approach would be suitable for an optimist, or ‘risk-seeking’
investor, who seeks to achieve the best results if the best happens.

Illustrations and further practice

Now read Illustration 6 ‘Geoffrey Ramsbottom – the maximax rule’, and read
Test Your Understanding 1 ‘Applying maximax’.

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