ABSTRACT
1 There is one implication of this maximin principle that is obviously unsatisfactory. It seeks security above all and is therefore highly conservative. In Table 35.2, for instance, we are led by it to choose a 2 rather than a 1, simply because, in choosing a 2, we can be sure of obtaining at least $140,000 whereas, if we choose a 1, we can be sure of obtaining at least $130,000. If we feel pretty certain of getting the least in all cases, we should indeed be wise to choose that least which is largest. And the least for a 2 is $10,000 larger than that for a 1. But if it so happens that the event b 2 does take place, our choice of a 2 yields us only $260,000 whereas, had we instead chosen option a 1, event b 2 would yield as much as $400,000. In other words, if b 2 takes place after all, we shall forgo an extra gain of $140,000 ($400,000 minus $260,000). The cost of playing safe – of ensuring $10,000 more if the worst should happen – is that of losing the opportunity of gaining $140,000 more if the best should happen.
