A project faces three potential states of the world with a varying number of users (n): 10, 20, or 80, with probabilities 0.3, 0.5, and 0.2. Three options are available with values per user, v, of $2, $5, and $10, with total costs of 10, 50, and 200, respectively. a. Set up the table from the data. b. Find the expected value of each option. Without additional information, which option is best? c. What would be the value of perfect information about the state of the world before the decision is made? d. Suppose the decision maker could purchase information that would reveal, prior to making the decision, whether the number of users will be more than 10 but provide no other insight. What is this information worth?
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
Game theory question
A project faces three potential states of the world with a varying number of users (n): 10, 20, or 80, with probabilities 0.3, 0.5, and 0.2. Three options are available with values per user, v, of $2, $5, and $10, with total costs of 10, 50, and 200, respectively.
a. Set up the table from the data.
b. Find the
c. What would be the value of perfect information about the state of the world before the decision is made?
d. Suppose the decision maker could purchase information that would reveal, prior to making the decision, whether the number of users will be more than 10 but provide no other insight. What is this information worth?
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