Question: please help Item 26: Question (4.5 pts.) Suppose the decision maker is a deltaperson. Her utility is given by u(x)= vx. She is facing the
please help

Item 26: Question (4.5 pts.) Suppose the decision maker is a deltaperson. Her utility is given by u(x)= vx. She is facing the following situation. Dollar Value BU $100 A1 A 0.8 SO BD $30 AZ Without clairvoyance, she ended up picking A2 that was worth $30. She's now considering if it's wise to buy perfect information and how much she should pay for it. She drew the the following tree to help her determine the value of clairvoyance. No Clairvoyance $30 Dollar Value UpdatedBU $100 AT "BU" CELA]=7 A So Updated8D u-value(A)=7 $30 Free Clairvoyance EUIn-? CE[I)=? UpdatedBU $100 A1 "BD" CE(Al- LA 50 u-value(A]=? UpdatedBD $30 a. How is she going to calculate the value of clairvoyance? VOC=EVII)-$30 b. If she gets a report from the clairvoyant that indicates "BU", what are her updated probabilities assigned to Branch BU and Branch BD? (Please type probabilities in a decimal form rather than a percent form. E.g.: 0.23 instead of 23%). UpdatedBU= UpdatedBD= c. What investment would she choose under each state of nature if she had access to free clairvoyance on uncertainty B? If she gets a report from the clairvoyant that indicates "BU", she would choose | A1 * | and the value at A, CE(A), is $ If she gets a report from the clairvoyant that indicates "BD", she would choose A1 v | and the value at A, CE(A), is $ C. What is the expected u-value for the decision with free clairvoyance, EU(I)? (Round up to 2 decimal places)- d. What is the value of the decision with free clairvoyance, CE(1)?(Round up to 2 decimal places)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
