In Problem 36, the Blue Sox general manager has asked a superscout to assign a probability to each of the three states of nature for the pitchers during the next 10 years. The scout estimates there is a .10 probability that these pitchers at this stage of their careers will have no injuries, a .60 probability that they will have a career with the normal number of injuries, and a .30 probability that they will have excessive injuries.
a. Using expected value, determine the best pitcher to sign.
b. Given the following 10-year contract price for each pitcher (in $millions), which would you recommend signing?
Jose Diaz .... $ 97.3
Jerry Damon ... $121.5
Frank Thompson ... $ 73.5
Derek Rodriguez . $103.4
Ken Griffin .... $ 85.7
c. Suppose that the general manager asked the superscout to determine the probabilities of each state of nature for each individual pitcher, and the results were as follows:

Determine the expected number of wins for each pitcher, and combined with the contract price in part b, indicate which pitcher you would recommend signing.

  • CreatedJuly 17, 2014
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