A-Z Popular New Decision Making Search »
Decision Making
 
Related Guides

4 Examples of Maximax Criterion

 , updated on
The maximax criterion is the option in a set of choices that maximizes potential gain irrespective of risk. As the maximax choice doesn't consider risk at all it isn't usually an optimal choice. However, it is a reasonable common choice due to a number of factors:

Optimism

If you believe that fortune favors the bold, the maximax choice may be attractive. The maximax criterion is associated with optimism as a strategy or as a personality trait. For example, a young entrepreneur may adopt maximax choices such as the decision to compete directly with a large firm as opposed to choosing a smaller niche that is easier to win. This may lead to quick cycles of failure and learning that allow the entrepreneur to eventually find a way to their goals.

Nothing To Lose

Risks don't mean as much when you don't have much to lose. For example, a firm with no customers has less to risk from a bold marketing strategy than a firm with 90% of the market that doesn't want to lose existing customers.

Perverse Incentives

Maximax choices occur when a person is rewarded for success but incurs no cost for failure. For example, a stock trader who is betting other peoples money with large rewards if they return 10% or more but few consequences if they lose money.

Optimization

In some cases, the maximax criterion happens to be the optimal choice. For example, a hockey team with 2 minutes on the clock that is two goals down may take extraordinary risks such as pulling their goalie if they need to tie the game to survive into the playoffs.
Overview: Maximax Criterion
Type
Definition
The choice in a set of options with the greatest potential gain irrespective of risk.
Related Concepts

Decision Making

This is the complete list of articles we have written about decision making.
A/B Testing
Abilene Paradox
Abstract Concept
Analysis Paralysis
Analytic Reasoning
Assertions
Benefit Of Doubt
Boil The Frog
Choice Architecture
Cold Logic
Collective Intelligence
Consensus
Convergent Thinking
Counterfactual
Creativity
Critical Thinking
Decision Analysis
Decision Authority
Decision Balance
Decision Costs
Decision Fatigue
Decision Framing
Decision Mapping
Decision Modelling
Decision Quality
Decision Rationale
Decision Support
Decision Tree
Devil's Advocate
Disagree And Commit
Divergent Thinking
Emotional Intelligence
Failure Of Imagination
Fallacies
Generalization
Group Decisions
Groupthink
Heuristics
Ideation
Imagination
Inaction
Indecision
Introspection
Intuition
Keep It Simple
Logic
Maximax Criterion
Minimax Criterion
Motivated Reasoning
Non Decision
Normative Model
Objectivity
Opportunity Cost
Overthinking
Paradox Of Choice
Pareto Analysis
Predictive Analytics
Preserving Ambiguity
Prioritization
Reverse Brainstorming
Sanity Check
Satisficing
Serious Game
Strategic Dominance
Thought Experiment
Tradeoffs
Visual Analytics
Visual Thinking
More ...
If you enjoyed this page, please consider bookmarking Simplicable.
 

Decision Making

A list of decision making techniques.

Abilene Paradox

The observation that groups may make collective decisions that are viewed as wrong or irrational by each individual member of the group.

Decision Making Process

A complete guide to the decision making process.

Rational Thought

The difference between rational thought and logic.

Uncertainty

The common types of uncertainty in decision making and strategy.

Information Costs

A definition of information costs with examples.

Reverse Brainstorming

A definition of reverse brainstorming with examples.

Decision Fatigue

The definition of decision fatigue with examples.

Devils Advocate

Taking a position that you do not necessarily agree with for the purposes of argument.

Paradox Of Choice

The definition of paradox of choice with examples.

Sanity Check

An overview of sanity checks, a decision making and problem solving technique.

Preserving Ambiguity

Overview of preserving ambiguity.

Strategic Dominance

Strategic dominance is your best choice in a given situation.

Indecision

The definition of indecision with examples.

Group Decisions

A list of group decision strategies and techniques.

Normative Decision Making

The definition of normative decision making with examples.

Non Decision

The definition of non-decision with examples.

Decision Examples

Examples of decisions made with different decision making approaches.
The most popular articles on Simplicable in the past day.

New Articles

Recent posts or updates on Simplicable.
Site Map