1. Given the payoff matrix below, answer the following questions: Alternative State of Nature #1 #2 #3...
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Question:
1. Given the payoff matrix below, answer the following questions:
Alternative State of Nature
#1 #2 #3 #4
A 1 0 2 3
B 2 4 5 6
C 4 3 1 2
(a) If somehow you find out for that state of nature #4 is going to occur, which alternative will you select?
(b) If you feel that P(#1) = .3, P(#2) = .4, P(#3) = .2, and P(#4) = .1,
(i) What is your expected payoff under certainty?
(ii) Which alternative has the highest expected monetary value?
(iii) What is your expected value of perfect information?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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