In a certain state lottery, a lottery ticket costs $3. In terms of the decision to purchase or not to purchase a lottery ticket, suppose that the following payoff table applies: State of Nature WinLoseDecision Alternativess1s2Purchase Lottery Ticket, d1250000-3Do Not Purchase Lottery Ticket, d200 A realistic estimate of the chances of winning is 1 in 290,000. Use the expected value approach to recommend a decision. If required, round your answer to two decimal places. If the amount is zero enter “0”.Recommended decision: Expected Value = $ fill in the blank If a particular decision maker assigns an indifference probability of 0.00001 to the $0 payoff. Would this individual purchase a lottery ticket?Decision: Use expected utility to justify your answer. If required, round your answer to five decimal places.Expected Utility = fill in the blank The input in the box below will not be graded, but may be reviewed and considered by your instructor.

Probability = Favorable outcomes /total outcomes Two decision alternatives given, We have to answer…

Answered: a certain state lottery, a lottery…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Related questions

Question

In a certain state lottery, a lottery ticket costs $3. In terms of the decision to purchase or not to purchase a lottery ticket, suppose that the following payoff table applies:

	State of Nature
	Win	Lose
Decision Alternatives	s₁	s₂
Purchase Lottery Ticket, d₁	250000	-3
Do Not Purchase Lottery Ticket, d₂	0	0

A realistic estimate of the chances of winning is 1 in 290,000. Use the expected value approach to recommend a decision. If required, round your answer to two decimal places. If the amount is zero enter “0”.

Recommended decision:

Expected Value = $ fill in the blank
If a particular decision maker assigns an indifference probability of 0.00001 to the $0 payoff. Would this individual purchase a lottery ticket?

Decision:
Use expected utility to justify your answer. If required, round your answer to five decimal places.

Expected Utility = fill in the blank

The input in the box below will not be graded, but may be reviewed and considered by your instructor.