Emily Watkins, a recent college graduate, faces some tough choices. Emily must decide whether to accept an offer for a job that pays $35,000 or hold out for another job that pays $45,000 a year. Emily thinks there is a 75% chance that she will get an offer for the higher-paying job.
The problem is that Emily has to make a decision on the lower-paying job within the next few days, and she will not know about the higher-paying job for two weeks.
a. Draw out the decision tree for Emily Watkins.
b. What is the key decision Emily faces? What is the expected value of each decision branch?
c. What other factors might Emily consider, aside from expected value?

  • CreatedApril 10, 2015
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