A decision maker is faced with two alternatives. The decision maker has determined that she is indifferent

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A decision maker is faced with two alternatives. The decision maker has determined that she is indifferent between the two alternatives when p = 0.45.

Alternative 1: Receive $82,000 with certainty

Alternative 2: Receive $143,000 with probability p and lose $15,000 with probability (1 - p).

(a) What is the expected value of Alternative 2 for this decision maker?

(b) What is the decision maker's certainty equivalent for this problem?

Related Book For answer-question

Business Statistics a decision making approach

ISBN: 978-0133021844

9th edition

Authors: David F. Groebner, Patrick W. Shannon, Phillip C. Fry

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Posted Date: Aug 29, 2018 08:17 AM

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A decision maker is faced with two alternatives. The decision maker has determined that she is indifferent

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Business Statistics a decision making approach

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