The Hurwicz Rule
The Hurwicz Rule assumes that without guidance people will tend to focus on the extremes (i.e., Maximin or Maximax). The Hurwicz rule allows a blending of optimism and pessimism using a selected ratio. You will choose an index of optimism, α, between 0 and 1, describing how optimistic you are with the remainder being pessimism. An α of, say, 0.2 means that you are more pessimistic than optimistic. When α = 0.1, that means that you are even more pessimistic than at α = 0.2. Setting α to 0.85 means that you are very optimistic but a small amount of pessimism (15%) remains.
The formula for the Hurwicz rule is as follows:
The formula ...
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