Savage Minimax Regret Criterion Method to Find Optimal Decision

In decision under uncertainty, decision makers have to choose one of a set number of alternatives with complete information about their outcomes but in the absence of any information or data about the probabilities of the various state of nature, we focus on avoiding regrets that may result from making a non-optimal decision. Although regret is a subjective emotional state, the assumption is made that it is quantifiable in direct (linear) relation to the rewards of the payoff. The classical approach of Savage Minimax regret criterion can be used to find an optimal decision and avoid regret. The savage minimax regret criterion examines the regret, opportunity cost or loss resulting when a particular situation occurs and the payoff of the selected alternative is smaller than the payoff that could have been attained with that particular situation. This approach is independent of the probabilities of the various outcomes: thus if regret can be accurately computed, one can reliably use minimax regret criterion