Question: Two different routes accommodate travel between two cities. Route A normally takes 60 minutes and route B normally takes 45 minutes. If traffic problems are

Two different routes accommodate travel between two cities. Route A normally takes 60 minutes and route B normally takes 45 minutes. If traffic problems are encountered on route A, the travel time increases to 70 minutes; traffic problems on route B increase travel time to 90 minutes. The probability of a delay is 0.20 for route A and 0.30 for route B.

a. Using the expected value approach, what is the recommended route?

b. If utilities are to be assigned to the travel times, what is the appropriate lottery? (The smaller times should reflect higher utilities.)

c. Use the lottery of part (b) and assume that the decision maker expresses indifference probabilities of

p = 0.80 for 60 minutes

p = 0.60 for 70 minutes

What route should this decision maker select? Is the decision maker a risk taker or a risk avoider?

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