Question: Question 3: [ 11 marks ] Following payoff table (Table 3) shows profit for a decision Analysis problem with two decision alternatives and two states

Question 3: [11 marks]

Following payoff table (Table 3) shows profit for a decision Analysis problem with two decision alternatives and two states of nature.

Table 3:

Decision Alternatives

States of Nature

S1

S2

D1

960

-490

D2

670

320

Suppose that the probability of S1 is 0.8 and probability of S2 is 0.2. What is the optimal decision using the expected value approach?

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