A decision maker who is considered to be a risk taker is faced with this set of probabilities and payoffs. S1 S2 S3 D1 5 10 20 D2 -25 0 50 D3 -50 -10 80 Probability .30 .35 .35 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 0 .20 -10 .18 -25 .10 Rank the decision alternatives on the basis of expected value and on the basis of expected utility.
7) A decision maker who is considered to be a risk taker is faced with this set of
probabilities and payoffs.
|
|
S1 |
S2 |
S3 |
|
D1 |
5 |
10 |
20 |
|
D2 |
-25 |
0 |
50 |
|
D3 |
-50 |
-10 |
80 |
|
|
.30 |
.35 |
.35 |
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
0 .20
-10 .18
-25 .10
Rank the decision alternatives on the basis of
utility.
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