The success probability p of a Bernoulli process has prior density 1, 0 < p < 1.
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Question:
The success probability p of a Bernoulli process has prior density 1, 0 < p < 1. Two alternatives are available. Alternative 1 has revenue of 200p. Alternative 2 has a revenue of 80. The process will be observed until the second success occurs. If each observation costs $1, show that the expected net gain of sampling is negative.
Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
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