with full graph

10. Use graphical sensitivity analysis to determine the range of values of the probability of state of nature s over which each of the decision alternatives has its largest expected value. State of Nature Decision dy 10 dz 16 d; 10 S2 Si 8 4 0 TOPIC: Graphical sensitivity analysis 12. For the payoff table below, the decision maker will use P(s) - 15,P(s) - 5, and P(s) - 35. State of Nature Decision d -5,000 1,000 10,000 d. -15,000 -2,000 40,000 S S; u. b. What alternative would be chosen according to expected value? For a lottery having a payoff of 40.000 with probability p and -15,000 with probability (1-P), the decision maker expressed the following indifference probabilities. Payoff Probability 10,000 .85 1,000 .60 -2,000 -5,000 .50 .53 C. Let U(40,000) = 10 and U(-15,000) = 0 and find the utility value for each payoff. What alternative would be chosen according to expected utility? Expected utility approach TOPIC: 13. A decision maker who is considered to be a risk taker is faced with this set of probabilities and payoffs Decision di d. d Probability S S -25 State of Nature 52 10 0 -10 .35 S 20 50 80 -35 -50 .30 + For the lottery p(80) + (1 - p)-50), this decision maker has assessed the following indifference probabilities Payoff 50 20 10 5 0 -10 -25 Probability .60 .35 .25 .22 .20 .18 .10 Rank the decision alternatives on the basis of expected value and on the basis of expected utility. Expected utility approach TOPIC