Question: Determine decision strategies based on expected utility for this decision tree. Use the following utility function: Payoff Indifference Probability 500 1 350 0.89 300 0.84

Determine decision strategies based on expected utility for this decision tree. Use the following utility function:

Payoff Indifference Probability
500 1
350 0.89
300 0.84
180 0.6
100 0.43
40 0.2
20 0.13
0 0

LET U(500)=1 and U(0)=0

Determine decision strategies based on expected

  1. What is the expected utility after branch A, i.e., EU( A ) =?

    A.

    0.381

    B.

    0.68

    C.

    0.43

    D.

    0.522

    E.

    0.336

QUESTION 2

  1. What is the expected utility after branch J, i.e., EU( J ) =?

    A.

    0.43

    B.

    0.68

    C.

    0.522

    D.

    0.336

    E.

    0.381

QUESTION 3

  1. What is the expected utility after branch K, i.e., EU( K ) =?

    A.

    0.336

    B.

    0.522

    C.

    0.43

    D.

    0.381

    E.

    0.68

QUESTION 4

  1. What is the expected utility of branch B, i.e., EU( B ) =?

    A.

    0.381

    B.

    0.68

    C.

    0.43

    D.

    0.522

    E.

    0.336

QUESTION 5

  1. What is the expected utility after branch C, i.e., EU( C ) =?

    A.

    0.43

    B.

    0.68

    C.

    0.522

    D.

    0.336

    E.

    0.381

QUESTION 6

  1. Based on the maximum expected utility approach, what should be the initial decision strategy?

    A.

    Select decision alternative A

    B.

    Select decision alternative B

    C.

    Select decision alternative C

D .6 0 E .4 300 L .6 F .5 500 20 M .4 40 B G .2 N .8 100 K H .3 o .2 180 350 C 100

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!