The Minimax Regret Rule
The Minimax regret rule bases the decision on minimizing the regret that you would have if you chose the wrong alternative under each state of nature. Conceptually, if you had selected an alternative, say A1, and the state of nature happened where A1 had the best payoff (in Xenon's case the economy stayed the same), you would have no regrets for having chosen A1. If, on the other hand, you had selected A1 and the economy got better, you would have regretted having not chosen A3—the best alternative under that state of nature. Your regret can be quantified as the difference between the payoff of the alternative you did choose and the payoff of the best alternative under that same state of nature.
The first step in the Minimax ...
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