You are trying to determine which MBA program to attend. You have been accepted at two programs: Indiana and Northwestern. You have chosen three attributes to use in helping you make your decision: For starting salary: Cost Starting salary Ambience For ambience: Cost Starting salary 1 } For each attribute the pairwise comparison matrix for Indiana and Northwestern is as follows. For cost: Indiana Northwestern Indiana Northwestern 1 Indiana Northwestern Ambience 2 7 Indiana Northwestern 1 []} 6 ] 1 Indiana Northwestern []} }] 1 Indiana Northwestern 4 [] 1] Using Analytic Hierarchy Process, determine which MBA program you should attend. The management of Bodrum Hospital would like to determine how many rooms in the emergency department they should dedicate to the patients affected by the ongoing pandemic and how to staff these rooms. Each room may be staffed with emergency nurses or general nurses. Emergency nurses provide specialized care to patients and are paid higher salaries than general nurses. Due to budgetary limitations, the hospital management has to choose between the following two options: Option 1 Four rooms, two staffed with emergency nurses and two staffed with general nurses Option 2 Three rooms, all staffed with emergency nurses The following two attributes influence the satisfaction with the hospital services, hence the decision of hospital management: Attribute 1 Time until a patient is accepted into a room in the emergency department (x) Attribute 2 Percentage of patients treated by the emergency nurses (x) Assume that the management's multi-attribute utility function u(x, x) exhibits mutual utility independence and that u(x) = 1 - u(x): x 900 x 10000 The management notes that an arriving patient is always accepted into a room in the emergency department between 0 and 30 minutes. Assessment I The management is indifferent between L1: (30, 100%) with probability 1 L2: (0, 100%) with probability 0.3 (30,0%) with probability 0.7 Assessment II The management is also indifferent between: L3: (0,0%) with probability 1 L4: (0, 100%) with probability 0.8 (30, 0%) with probability 0.2 Part a) Determine the hospital management's multi-attribute utility function. Specify if the attributes are substitutes or complements. Assume that if a room is available when a patient arrives, then the patient is accepted into a room within 5 minutes. If a room is not available when a patient arrives, the patient is accepted within 20 minutes. With four rooms (Option 1), one will be immediately available 80% of the time, and with three rooms (Option 2), one will be immediately available 60% of the time. Also note that half of the patients will be treated by the emergency nurses in Option 1, while all patients will be treated by the emergency nurses in Option 2. Part b) Using decision tree analysis and the multi-attribute utility function from part (a), determine the best option for the hospital management. In a behavioral experiment conducted by Tversky and Kahneman, 72 participants were asked to choose between lottery 1 and lottery 2 in Decision 1, and lottery 3 and lottery 4 in Decision 2. Decision 1: Lottery 1: A 0.001 chance at winning $5000 and a 0.999 chance of winning $0 Lottery 2: A sure gain of $5 Decision 2: Lottery 3: A 0.001 chance of losing $5000 and a 0.999 chance of losing $0 Lottery 4: A sure loss of $5 a) Which choices would be made by a risk-averse decision maker in these two decisions? b) Which choices would be made by a risk-seeking decision maker in these two decisions? c) More than 75% of all participants preferred lottery 1 to lottery 2 in Decision 1 and lottery 4 to lottery 3 in Decision 2. Explain why this is inconsistent with expected utility maximization. What cognitive bias do you identify in this experiment?