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1. A decision maker who is considered to be a risk taker is faced with this set of probabilities and payoffs. S2 S3 5 10 20 d1 d2 d3 probabilit -25 50 -50 -10 80 .30 .35 .35 y

1. A decision maker who is considered to be a risk taker is faced with this set of probabilities and payoffs. S2 S3 5 10 20 d1 d2 d3 probabilit -25 50 -50 -10 80 .30 .35 .35 y

College Algebra
College Algebra
7th Edition
ISBN:9781305115545
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
Chapter9: Counting And Probability
Section9.4: Expected Value
Problem 1E: If a game gives payoffs of $10 and $100 with probabilities 0.9 and 0.1, respectively, then the...
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1. A decision maker who is considered to be a risk taker is faced with this set of probabilities and payoffs. S1 S2 S3 d1 d2 d3 probabilit 10 20 -25 50 -50 -10 80 .30 .35 .35 y For the lottery p (80) + (1 - p) (-50), this decision maker has assessed the following indifference probabilities. Payoff Probability 50 .60 20 .35 10 .25 5 22 .20 -10 .18 -25 .10 Rank the decision alternatives on the basis of expected value and on the basis of expected utility
Transcribed Image Text:1. A decision maker who is considered to be a risk taker is faced with this set of probabilities and payoffs. S1 S2 S3 d1 d2 d3 probabilit 10 20 -25 50 -50 -10 80 .30 .35 .35 y For the lottery p (80) + (1 - p) (-50), this decision maker has assessed the following indifference probabilities. Payoff Probability 50 .60 20 .35 10 .25 5 22 .20 -10 .18 -25 .10 Rank the decision alternatives on the basis of expected value and on the basis of expected utility
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