A decision maker who is considered to be a risk taker is faced with this set of
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A decision maker who is considered to be a risk taker is faced with this set of probabilities and payoffs.
s1 | s2 | s3 | |
d1 | 5 | 10 | 20 |
d2 | -25 | 0 | 50 |
d3 | -50 | -10 | 80 |
Probability Y | .30 | .35 | .35 |
For the lottery p (80) + (1 - p) (-50), this decision maker has assessed the following indifference probabilities.
Payoff | Probability |
50 | .60 |
20 | .35 |
10 | .25 |
5 | .22 |
0 | .20 |
-10 | .18 |
-25 | .10 |
Rank the decision alternatives on the basis of expected value and on the basis of expected utility.
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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