The following payoff table shows profit for a decision analysis problem with two

Question

The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature: The probabilities for the states of nature are P(s1) = 0.65, P(s2) = 0.15, and P(s3) = 0.20. What is the optimal decision strategy if perfect information were available? What is the expected value for the decision strategy developed in part (a)? If required, Using the expected value approach, what is the recommended decision without perfect information? What is its expected value? If required, What is the expected value of perfect information?

Explanation / Answer

b.  0.65*250 + 0.15*100 + 0.20*75 = 192.5

c.  0.65*250 + 0.15*100 + 0.20*25 = 182.5

d. 0.65*250 + 0.15*100 + 0.20*75 = 192.5

If you don't understand anything then comment, I'ill revert back on the same. :)

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.