6) For the payoff table below, the decision maker will use P(s1) = .15, P(s2) = .5, and P(s3) = .35. s1 s2 s3 d1 -5000 1000 10,000 d2 -15,000 -2000 40,000 (a) What alternative would be chosen according to expected value? (b) For a lottery having a payoff of 40,000 with probability p and -15,000 with probability (1-p), the decision maker expressed the following indifference probabilities. Payoff Probability 10,000 .85 1000 .60 -2000 .53 -5000 .50 Let U(40,000) = 10 and U(-15,000) = 0 and find the utility value for each payoff. (c) What alternative would be chosen according to expected utility? 6) For the payoff table below, the decision maker will use P(s1) =.15, P(s2) = .5, and P(s3) =.35.S1S2S3di-5000100010,000d2-15,000-200040,000а.What alternative would be chosen according to expected value?For a lottery having a payoff of 40,000 with probability p and -15,000 withprobability (1-p), the decision maker expressed the following indifferenceprobabilities.b.ITProbabilityPayoff10,000.851000.60-2000.53-5000.50Let U(40,000) = 10 and U(-15,000) = 0 and find the utility value for each payoff.What alternative would be chosen according to expected utility?c.

The probability of different alternatives s1, s2 and s3 are P(s1)=0.15, P(s2 )=0.50 P(s3)=0.35.

Answered: 6) For the payoff table below, the…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

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6) For the payoff table below, the decision maker will use P(s1) = .15, P(s2) = .5, and P(s3) = .35. s1 s2 s3 d1 -5000 1000 10,000 d2 -15,000 -2000 40,000 (a) What alternative would be chosen according to expected value? (b) For a lottery having a payoff of 40,000 with probability p and -15,000 with probability (1-p), the decision maker expressed the following indifference probabilities. Payoff Probability 10,000 .85 1000 .60 -2000 .53 -5000 .50 Let U(40,000) = 10 and U(-15,000) = 0 and find the utility value for each payoff. (c) What alternative would be chosen according to expected utility?

6) For the payoff table below, the decision maker will use P(s1) =.15, P(s2) = .5, and P(s3) =
.35.
S1
S2
S3
di
-5000
1000
10,000
d2
-15,000
-2000
40,000
а.
What alternative would be chosen according to expected value?
For a lottery having a payoff of 40,000 with probability p and -15,000 with
probability (1-p), the decision maker expressed the following indifference
probabilities.
b.
IT
Probability
Payoff
10,000
.85
1000
.60
-2000
.53
-5000
.50
Let U(40,000) = 10 and U(-15,000) = 0 and find the utility value for each payoff.
What alternative would be chosen according to expected utility?
c.

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