For the payoff table below, the decision maker will use P(S) = 0.16, P(S2) = 0.5,...

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For the payoff table below, the decision maker will use P(S₁) = 0.16, P(S2) = 0.5, and P(S3) = 0.34. Decision d₁ d₂ S1 -4000 -10,000 Payoff Probability State of Nature S2 1000 -2000 (a) What alternative would be chosen according to expected value? (b) For a lottery having a payoff of 50,000 with probability p and -10,000 with probability (1-p), the decision maker expressed the following indifference probabilities. 10,000 0.75 1000 0.65 S3 10,000 50,000 -2000 0.55 -4000 0.45 Let U(50,000) = 10, U(-10,000) = -5. Then, find the utility value for each payoff. (c) What alternative would be chosen according to expected utility? For the payoff table below, the decision maker will use P(S₁) = 0.16, P(S2) = 0.5, and P(S3) = 0.34. Decision d₁ d₂ S1 -4000 -10,000 Payoff Probability State of Nature S2 1000 -2000 (a) What alternative would be chosen according to expected value? (b) For a lottery having a payoff of 50,000 with probability p and -10,000 with probability (1-p), the decision maker expressed the following indifference probabilities. 10,000 0.75 1000 0.65 S3 10,000 50,000 -2000 0.55 -4000 0.45 Let U(50,000) = 10, U(-10,000) = -5. Then, find the utility value for each payoff. (c) What alternative would be chosen according to expected utility?

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a What alternative would be chosen according to expected value The expected value of ea... View the full answer