f her most popular works. If she signs with the network she will receive he signs with the movie company, the amount she will receive depends k office) to the movie. Olive's payoffs are summarized: Small Medium $200,000 1,000,000 3,000,000 900,000 900,000 900,000 0.3 0.6 Box Office Large 0.1 additional information, what is Olive's best decision? ve may hire a market research firm to conduct a survey at a cost the survey would be either a "F"avorable or an "U"nfavorable pub he firm's historical accuracy, as measured by conditional probabilities: all) = .3 P("U"|Small) = .7 P("U" Medium) = .4 P("U"|Large) = .2 dium) = .6 ge) = .8 sion tree for this problem e's best decision? ost that Olive should be willing to pay for the survey results?
f her most popular works. If she signs with the network she will receive he signs with the movie company, the amount she will receive depends k office) to the movie. Olive's payoffs are summarized: Small Medium $200,000 1,000,000 3,000,000 900,000 900,000 900,000 0.3 0.6 Box Office Large 0.1 additional information, what is Olive's best decision? ve may hire a market research firm to conduct a survey at a cost the survey would be either a "F"avorable or an "U"nfavorable pub he firm's historical accuracy, as measured by conditional probabilities: all) = .3 P("U"|Small) = .7 P("U" Medium) = .4 P("U"|Large) = .2 dium) = .6 ge) = .8 sion tree for this problem e's best decision? ost that Olive should be willing to pay for the survey results?
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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Transcribed Image Text:3.) Olive Branch is a writer of romance novels. A movie company and a TV network both want
exclusive rights to one of her most popular works. If she signs with the network she will receive a
single lump sum, but if she signs with the movie company, the amount she will receive depends on
the market response (box office) to the movie. Olive's payoffs are summarized:
Movie Company
TV network
Small
b.
$200,000 1,000,000 3,000,000
900,000 900,000 900,000
Probability
0.3 0.6 0.1
a. Without any additional information, what is Olive's best decision?
Additionally, Olive may hire a market research firm to conduct a survey at a cost of
$100,000. The result of the survey would be either a "F"avorable or an "U"nfavorable public
response to the movie. The firm's historical accuracy, as measured by conditional probabilities is:
P("F"|Small) = .3
P("U"|Small) = .7
P("F"|Medium) = .6
P("U"Medium) = .4
P("F"Large) = .8
P("U"Large) = .2
b. Draw the decision tree for this problem
Box Office
Medium Large
What is Olive's best decision?
d. What is the most that Olive should be willing to pay for the survey results?
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