Question: Recall our home sales' problem. You are deciding between three agents to act as your seller's agent. Each agent has the following information associated with
Recall our home sales' problem. You are deciding between three agents to act as your seller's agent. Each agent has the following information associated with him/her: Agent A: 20% chance of selling at $400K; 60% of selling at $375K, 20% chance of selling at $350K; will receive 4% commission on sale Agent B: 30% chance of selling at $400K; 40% of selling at $375K, 30% chance of selling at $350K; will receive 3% commission on sale Agent C: 100% chance of selling at $375K; will receive a 2.5% commission on sale Note their commission is on the gross (i.e., sale) price of the house 1) Build a decision tree to model your problem. 2) Create a risk profile for the agents' expected profit. Does any agent exhibit deterministic or stochastic dominance? 3) Discuss any insights you achieve from the analysis
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