Dan Hein Owns the Mineral and Drilling Rights to a 1,000

question 100

Multiple Choice

Dan Hein owns the mineral and drilling rights to a 1,000 acre tract of land.If he drills a well and does not strike oil his net loss will be $50,000, but if he drills a well and strikes oil his net gain will be $100,000.If he does not drill, his loss is the cost of the mineral and drilling rights, which amount to $1000.The probability of the state of nature "oil in the tract" is unknown.If Dan is a pessimist, he would choose the ____________.

• A)maximin criterion
• B)maximax criterion
• C)Hurwicz criterion
• D)minimax regret strategy
• E)maximin regret strategy

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Definitions:

Estoppel

A rule whereby a person may not deny the truth of a statement of fact made by him or her when another person has relied and acted upon the statement.

Consideration

The benefit or value that must be exchanged between parties to form a valid contract.

Common Law

A legal system based on precedent and court decisions rather than written laws or statutes.

Statute Law

Law enacted by a legislative body, such as a parliament or congress, officially documented and codified.