Question: For the payoff table below, the decision maker will use P(s,) = 0.15, P(s;) = 0.5, and P(s,) = 0.35. State of Nature Decision $1

For the payoff table below, the decision maker will use P(s,) = 0.15, P(s;) = 0.5, and P(s,) = 0.35. State of Nature Decision $1 $2 di -5000 1000 10,000 d2 -15,000 -2000 40,000 For a lottery having a payoff of 40,000 with probability p and -15,000 with probability (1 - p), the decision maker expressed the following indifference probabilities. Payoff Probability Utility 10,000 .85 1000 60 -2000 .53 -5000 .50 b Let U(40,000) = 10 and U(-15,000) = 0.a = 6 : What alternative would be chosen according to expected utility? EU(d1) = 6.725 8 and EU(d2) = 6:15 # ,so choose

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