What is the expected value at node 2?

600

640

620

660

What is the expected value at node 4?

460

560

500

480

What is the expected value at node 5?

800

1000

1220

1120

What is the expected value at node 3?

724

824

800

744

Using the expected value approach, what is your recommended decision?

Both Space Pirates and Battle Pacific

Space Pirates

Battle Pacific

Neither Space Pirates nor Battle Pacific.

Video Tech is considering marketing one of two new video games for the coming holiday season: Battle Pacific or Space Pirates. Battle Pacific is a unique game and appears to have no competition. Video Tech is optimistic about its Space Pirates game. However, the concern is that profitability will be affected by a competitor's introduction of a video game viewed as similar to Space Pirates. Estimated profits (in thousands of dollars) are given at the ending branches of the decision tree. Battle Pacific Space Pirates High 0.2 Medium 0.5 Low 0.3 With Competition 0.6 Without Competition 0.4 4 High 0.3 Medium 0.4 Low 0.3 High 0.5 Medium 0.3 Low 0.2 1000 700 300 H800 H400 H 200 H 1600 H800 H400