The East Chester Tribune must decide whether to publish a Sunday edition. The publisher thinks the probability is 0.6 that a Sunday edition would be a success and 0.4 that it would be a failure. If it is a success, she will gain $100,000. If it is a failure, she will lose $80,000.
a. Construct a decision tree corresponding to the problem, and use backward induction to solve the problem. (Assume that the publisher is risk-neutral.)
b. List all forks in the decision tree you constructed; then indicate whether each is a decision fork or a chance fork and state why.