Assume you are the owner of The Blues Inc., an international manufacturer of electronic products, and you are contemplating introducing a new type of Blue Ray player. After considering the potential market share for the product, your accountant estimated that after the first year of the new product on the market, The Blues inc. may have a financial result ranging from a loss of AUD 280,000 to a profit of AUD 800,000. To take a decision in this situation, you need to assess your utility function over the expected financial outcomes. In this task, you need to assess one of the quantiles of your utility function, chosen depending on the last digit of your UTAS student ID number, as per the following table:

You need to perform the following:

a) Define the level of the error, Δ, that corresponds to the range of the attribute (the financial result) and the expectations of the elicitation process.

b) Write in words the complete dialorg to assess the uncertainty inteval of the selected α-quantile of utility, including:

         i. Initial stage of the assessment process up till first indifference;

         ii. Elicitation of the lower bound of the α-quantile of utility;

        iii. Elicitation of the upper bound of the α-quantile of utility; and

        iv. Determination of the final uncertainty interval of the selected α-quantile of utility and its suggested point estimate.

Transcribed Image Text:

Last digit of student ID Quantile index 0.05 0.15 2 3 5 0.25 0.35 0.45 0.55 9 0.65 7 8 0.75 0.85 9 0.95 Last digit of student ID Quantile index 0.05 0.15 2 3 5 0.25 0.35 0.45 0.55 9 0.65 7 8 0.75 0.85 9 0.95

Answer rating: 100% (QA)

a The level of error that corresponds to the range of the attribute the financial result and the expectations of the elicitation process can be calcul... View the full answer