The following is a payoff table giving profits for various situations. States of Nature Alternatives ABC Alternative
Question:
The following is a payoff table giving profits for various situations.
States of Nature Alternatives ABC Alternative 1:100 120 180 Alternative 2:120 140 120 The probabilities for states of nature A, B, and C are 0.3, 0.5, and 0.2, respectively.
Calculate the expected values for both alternatives. What alternative would be chosen according to the expected value?
For a lottery having payoffs of 200 with probability p and-100 with probability (1-p), the decision-maker expressed the following indifference probabilities.
Payoff Probability 200 .99 180 .95 140 .90 120 .87 100 .84 50 .75 -100 .50
Calculate the Expected Utility for both alternatives
What alternative would be chosen according to expected utility?
Finite Mathematics and Its Applications
ISBN: 978-0134768632
12th edition
Authors: Larry J. Goldstein, David I. Schneider, Martha J. Siegel, Steven Hair