Without drawing a decision tree, determine your Bayesian decision, by maximizing the expected payoff. 2.2 and 2.3 How would you decide if you were to use the two other decision paradigms discussed in class and used also in Question 1 above. 2.4 Comment on the outcome and state your own (personally preferred) decision.

Question 2 (20 points) You developed a new software product to play high-quality video games on a computer. The software has unique features that you patented. However, it appears that some of these features were copied and used in a competitive software product recently released by MegaVideo Corporation. Therefore, you consider suing MegaVideo for patent infringement. With legal fees and other expenses, your cost of going to trial is estimated to be $1 million. You think that you have a 60% chance of winning the case, in which case you would receive $4 million in punitive damages. If you lose the case, then you will receive nothing. Moreover, in the latter case, there is a 30% chance that the judge would also order you to pay for court expenses and legal fees incurred by MegaVideo implying an additional cost of $1.5 million. As an alternative to consider, MegaVideo has offered you $1.2 million to settle this case out of court. 2.1 Without drawing a decision tree, determine your Bayesian decision, by maximizing the expected payoff. 2.2 and 2.3 How would you decide if you were to use the two other decision paradigms discussed in class and used also in Question 1 above. 2.4 Comment on the outcome and state your own (personally preferred) decision. Question 2 (20 points) You developed a new software product to play high-quality video games on a computer. The software has unique features that you patented. However, it appears that some of these features were copied and used in a competitive software product recently released by MegaVideo Corporation. Therefore, you consider suing MegaVideo for patent infringement. With legal fees and other expenses, your cost of going to trial is estimated to be $1 million. You think that you have a 60% chance of winning the case, in which case you would receive $4 million in punitive damages. If you lose the case, then you will receive nothing. Moreover, in the latter case, there is a 30% chance that the judge would also order you to pay for court expenses and legal fees incurred by MegaVideo implying an additional cost of $1.5 million. As an alternative to consider, MegaVideo has offered you $1.2 million to settle this case out of court. 2.1 Without drawing a decision tree, determine your Bayesian decision, by maximizing the expected payoff. 2.2 and 2.3 How would you decide if you were to use the two other decision paradigms discussed in class and used also in Question 1 above. 2.4 Comment on the outcome and state your own (personally preferred) decision