Question: Based on the information given below, respond to questions 1 1 and 1 4 Alices an aspiring author, is considering pitching her book to a
Based on the information given below, respond to questions and
Alices an aspiring author, is considering pitching her book to a publishing house. The publishing house may decide to reject the book, but they may also choose to offer a publishing deal with either a oneyear or twoyear contract. Alice has two options: pitch her book and wait for the publishing house's decision or selfpublish the book. The potential outcomes and corresponding proflts in thousands of dollars for different scenarios are as follows:
tableState of NatureDecision Alternative,Reject, s Year, s Years, ssPitch Book, SelfPublish,
The probabilities for the states of nature are and Alice also has the option to hire a literary agent who can evaluate the book's market potential for a fee of $ Assume that the agency review will result in a favorable or an unfavorable U neview and that the following probabilities are relevant:
How much is EVPI in this decisionmaking problem? points
a
b
c
d
What is the recommended decision? Points
a No Agency, selfpublish.
b No Agency, pitch book.
c hire a literary agent, if favorable selfpublish, if unfavorable pitch book.
d hire a literary agent, if favorable pitch book, if unfavorable selfpublish.
How much is EVSI in this decisionmaking problem? points
a
b
c
d
What is the efficiency of the sample information survey agent evaluation points
a
b
c
d
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