The following profit payoff table was presented in Problem 1:

The probabilities for the states of nature are P(s1) = 0.65, P(s2) = 0.15, and P(s3) = 0.20.
a. What is the optimal decision strategy if perfect information were available?
b. What is the expected value for the decision strategy developed in part (a)?
c. Using the expected value approach, what is the recommended decision without perfect information? What is its expected value?
d. What is the expected value of perfectinformation?

Transcribed Image Text:

State of Nature Decision Alternative 250 100 100 100 di 25 75