Decision-making Techniques — ACCA Practice Question 09

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Break down the term 'minimax regret'. It means minimizing the maximum regret (opportunity loss).

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C.To choose the option that minimizes the maximum possible opportunity loss.✓ Correct

The minimax regret rule is a decision-making technique under uncertainty. It involves creating a regret table (showing the opportunity loss of not picking the best option for each state of nature), identifying the maximum regret for each decision alternative, and then choosing the alternative with the lowest (minimum) maximum regret.

Common mistakes

Confusing minimax regret with maximin (which looks at actual profits, not opportunity losses).

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Practice the full ACCA PM — Performance Management Practice Exam 5

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