Suppose you are the Google manager in charge of making the decision about whether to introduce self-driving cars as a product for the general public. Suppose that if the car is introduced, there is a 50% chance that a law is introduced that will hold Google liable for accidents. If the law passes, the existing Google cars cause a net profit of -$10B for Google. If the law fails, then the net profit is $6B.

a. Draw the decision tree for the problem described above.

b. Suppose a political consultant offers to figure out whether this law could pass before you make the product introduction decision. How much would you pay for the information?

c. Suppose the consultant offers to lobby against the bill if it is proposed. If you don't hire the consultant, the odds of the bill passing are 50%. If you do hire him, the chance drops to 25%. How much would you pay for the consultant's services?

Answer rating: 100% (QA)

a Decision Tree Law Passed 10B Chance 50 Start Law Failed 6B Chance 50 b The Expected Value EV ... View the full answer