Question: Problem 13-27 (Algorithmic) In a certain state lottery, a lottery ticket costs $2. In terms of the decision to purchase or not to purchase a

Problem 13-27 (Algorithmic) In a certain state lottery, a lottery ticket costs $2. 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 51 Decision Alternative Purchase Lottery Ticket, di Do Not Purchase Lottery Ticket, d2 250000 0 a. A realistic estimate of the chances of winning is 1 in 290,000. Use the expected value approach to recommend a decision. If required, round your answer to two decimal places. Recommended decision: Expected Value = $ b. If a particular decision maker assigns an indifference probability of 0.00001 to the $0 payoff, suppose that the following payoff table applies: State of Nature win Lose Decision Alternative Purchase Lottery Ticket, di Do Not Purchase Lottery Ticket, 2 10 0.00001 0.00001 Would this individual purchase a lottery ticket? Recommended decision: Expected Value - $ b. If a particular decision maker assigns an indifference probability of 0.00001 to the $0 payoff, suppose that the following payoff table applies State of Nature Win Decision Alternative Purchase Lottery Ticket, di Do Not Purchase Lottery Ticket, d2 0.00001 0.00001 Would this individual purchase a lottery ticket? Decision: Use expected utility to justify your answer. If required, round your answer to five decimal places. Expected Utility The input in the box below will not be graded, but may be reviewed and considered by your instructor

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