Question: Expected payoff without experimentation = $8,000 (Under Bayes' decision rule). Expected payoff with no cost/ loss is = 0.2 * $0 + 0.5 * $10,000

Expected payoff without experimentation = $8,000 (Under Bayes' decision rule). Expected payoff with no cost/ loss is = 0.2 * $0 + 0.5 * $10,000 + 0.3 * $20,000 = $11,000 Then, EVPI = EP(with no cost/ loss) * EP(without experimentation) = $11,000 7 $8,000 2 $3,000 Here $3,000

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