Question: For this problem, assume that utility values are constrained to the interval [0,1]. The table below shows payoffs corresponding to a decision problem with two

For this problem, assume that utility values are constrained to the interval [0,1]. The table below shows payoffs corresponding to a decision problem with two decisions (D1, D2). and two states of nature (S1, S2). If a decision maker who assigns a utility of 0.5 to the $500 payoff is indifferent between D1 and D2, answer the following questions: a) What is the utility range (min, max) that a risk-averse decision maker would assign to the $500 payoff? b) What is the utility range (min, max) for the $500 payoff under which a risk-averse decision maker would choose D2? c) What is the utility range (min, max) for the $500 payoff under which a risk-seeking decision maker would choose D2? d) What decision would a risk-neutral individual make? Why? e) What is the EVPI for a risk-neutral decision-maker? S1,D1 = 1000 S1,D2 = 500 S2,D1 = -1000 S2,D2 = 1000

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