Additional exercise Consider the Texaco-Pennzoil problem: (a) What is EVPI to Pennzoil regarding Texaco's reaction to a counteroffer of $5B? Can you explain this result intuitively? (b) The timing of information acquisition may make a difference. i. Suppose that Pennzoil could obtain information about the final court decision before making his current decision (to take the $2B or counteroffer $5B). What would be the EVPI of this information? ii. Suppose Pennzoil knew he would be able to obtain perfect information only after he has made his current decision, but before he would have to respond to a potential Texaco counteroffer of $3B. What would be EVPI in this case? iii. EVPI for (ii) should be less than EVPI calculated in (i). Explain why. Additional exercise Consider the Texaco-Pennzoil problem: (a) What is EVPI to Pennzoil regarding Texaco's reaction to a counteroffer of $5B? Can you explain this result intuitively? (b) The timing of information acquisition may make a difference. i. Suppose that Pennzoil could obtain information about the final court decision before making his current decision (to take the $2B or counteroffer $5B). What would be the EVPI of this information? ii. Suppose Pennzoil knew he would be able to obtain perfect information only after he has made his current decision, but before he would have to respond to a potential Texaco counteroffer of $3B. What would be EVPI in this case? iii. EVPI for (ii) should be less than EVPI calculated in (i). Explain why