Question: 1. The following table provides profits based on various possible decision alternatives and various levels of demand. States of Nature Demand Alternatives Low Medium High

1. The following table provides profits based on various possible decision alternatives and various levels of demand. States of Nature Demand Alternatives Low Medium High Alternative 1 80 120 140 Alternative 2 90 90 90 Alternative 3 50 70 150 The probability of a low demand is 0.4, while the probability of a medium and high demand is each 0.3. (a) What decision would an optimist make? (b) What decision would a pessimist make? (c) What is the highest possible expected monetary value? (d) Calculate the expected value of perfect information for this situation.

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