The following payoff table shows profits associated with a set of 3 alternatives

ID: 3267146 • Letter: T

Question

The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature:

Payoff Table:

Opportunity Loss Table:

1.) If the probability of S1 is 0.4, then the probability of S2 is?
a. 1.0 | b. 0.6 | c. 0.4 | d0.5

2.) If the probability of S1 is 0.2 and S2 is 0.8, then the expected monetary value of A1 is:
a. 5.6 | b. 8 | c. 2.4 | d. 16

3.) If the probability of S1 is 0.2 and S2 is 0.8, then the expected opportunity loss (EOL) for A1 is
A) 4.8 B) 0 C) 5.6 D) 1.2

4.) Iif the probability of S1 is 0.5, then the expected monetary value (EMV ) for A1 is
A) 4 B) 3 C) 8 D) 6.5

5.) f the probability of S1 is 0.5, then the expected opportunity loss (EOL) for A1 is
A) 8 B) 3 C) 4.5 D) 7

6.) If the probability of S1 is 0.5, then the EVPI for the payoff table is
A) 3 B) 8 C) - 3 D) 11

States A1 A2 A3 1 12 -2 8 2 4 10 5

1) probability of S2 =1-P(of S1) =1-0.4 =0.6

2) expected monetary value of A1 =0.2*12+0.8*4=5.6

3) expected opportunity loss (EOL) for A1 =0.2*0+0.8*6=4.8

4)expected monetary value (EMV ) for A1 =0.5*12+0.5*4=8

5)expected opportunity loss (EOL) for A1 is =0.5*0+0.5*6=3

EVPI for the payoff table is =expected payoff with perfect information-expected payoff without perfect information

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