Competitor enters market Competitor does not enter market 0.5 0.5 Sell business 41 4 Do nothing -8 Increase marketing campaign 3 7. Launch new product 8.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Competitor enters market Competitor does not enter market
0.5
0.5
Sell business
4
4
Do nothing
-8
Increase marketing campaign
31
7.
Launch new product
What is the optimal decision based on Maximin?
Sell business
Do nothing
Increase marketing campaign
Launch new product
What is the optimal decision based on Bayes' Rule (Expected Valué)?
Increase marketing campaign
Sell business
Launch new product
Do nothing
What is the expected value?
04
07
Transcribed Image Text:Competitor enters market Competitor does not enter market 0.5 0.5 Sell business 4 4 Do nothing -8 Increase marketing campaign 31 7. Launch new product What is the optimal decision based on Maximin? Sell business Do nothing Increase marketing campaign Launch new product What is the optimal decision based on Bayes' Rule (Expected Valué)? Increase marketing campaign Sell business Launch new product Do nothing What is the expected value? 04 07
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