Question: Example 1. A decision maker (DM) has to make a decision a without knowing the underlying state . Suppose the DM has preference u(a,)2, and

Example 1. A decision maker (DM) has to make a decision a without knowing the underlying state . Suppose the DM has preference u(a,)2, and her prior belief is that follows a normal distribution with the mean 0 and variance 02. The DM receives a signal s = + about , where is normally distributed with mean 0 and variance 2.. What is Dm's optimal decision a when receiving a signal s

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