For the payoff table below, the decision maker will use P(s,) = 0.30, P(s,) = 0.35,...
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For the payoff table below, the decision maker will use P(s,) = 0.30, P(s,) = 0.35, and P(s,) = 0.35. State of Nature Decision s, s s, 10 20 0 50 025 O50 010 80 d, a. What alternative would be chosen according to expected value? b. The decision maker developed the following indifference probabilities. Find the utility value for each payoff. Payoff Probability 50 .60 20 35 10 .25 .22 .20 010 .18 025 .10 c. What alternative would be chosen according to expected utility? d. Does this decision maker behave like a risk taker or a risk avoider? For the payoff table below, the decision maker will use P(s,) = 0.30, P(s,) = 0.35, and P(s,) = 0.35. State of Nature Decision s, s s, 10 20 0 50 025 O50 010 80 d, a. What alternative would be chosen according to expected value? b. The decision maker developed the following indifference probabilities. Find the utility value for each payoff. Payoff Probability 50 .60 20 35 10 .25 .22 .20 010 .18 025 .10 c. What alternative would be chosen according to expected utility? d. Does this decision maker behave like a risk taker or a risk avoider?
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Related Book For
Business Statistics
ISBN: 978-0321925831
3rd edition
Authors: Norean Sharpe, Richard Veaux, Paul Velleman
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