Question: Problem 13-27 (Algorithmic) In a certain state lottery, a lottery ticket costs $1. In terms of the decision to purchase or not to purchase a

Problem 13-27 (Algorithmic) In a certain state

Problem 13-27 (Algorithmic) In a certain state lottery, a lottery ticket costs $1. In terms of the decision to purchase or not to purchase a lottery ticket, suppose that the following payoff table applies: State of Nature Win Lose 52 Decision Alternatives Purchase Lottery Ticket, d1 Do Not Purchase Lottery Ticket, d2 S1 550000 -1 a. A realistic estimate of the chances of winning is 1 in 200,000. Use the expected value approach to recommend a decision. If required, round your answer to two decimal places. If the amount is zero enter"0" Recommended decision: Purchase Lottery Ticket Expected Value = $ 1.75 b. If a particular decision maker assigns an indifference probability of 0.00001 to the $0 payoff. Would this individual purchase a lottery ticket? Decision: Yes, Purchase Lottery Ticket Use expected utility to justify your answer. If required, round your answer to five decimal places. Expected Utility = 0.00001 The input in the box below will not be graded, but may be reviewed and considered by your instructor

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