MC Qu. 9-74 Refer to the following payoff... Refer to the following payoff table: Alternative A1 A2 Prior Probability State of Nature S1 S2 -40 100 0.4 75 0 0.6 There is an option of paying $100 to have research done to better predict which state of nature will occur. When the true state of nature is S1, the research will accurately predict S1 60% of the time. When the true state of nature is S2, the research will accurately predict S2 80% of the time. What is the unconditional probability that the research predicts S1?

Practical Management Science
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Chapter2: Introduction To Spreadsheet Modeling
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0.32
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0.56
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Transcribed Image Text:Multiple Choice 0.32 0.4 0.44 0.56 0.6
MC Qu. 9-74 Refer to the following payoff...
Refer to the following payoff table:
Alternative
A1
A2
Prior Probability
State of Nature
S1
S2
-40
100
0.4
75
0
0.6
There is an option of paying $100 to have research done to better predict which state of nature will occur. When the true state of nature is S1, the
research will accurately predict S1 60% of the time. When the true state of nature is S2, the research will accurately predict S2 80% of the time.
What is the unconditional probability that the research predicts S1?
Transcribed Image Text:MC Qu. 9-74 Refer to the following payoff... Refer to the following payoff table: Alternative A1 A2 Prior Probability State of Nature S1 S2 -40 100 0.4 75 0 0.6 There is an option of paying $100 to have research done to better predict which state of nature will occur. When the true state of nature is S1, the research will accurately predict S1 60% of the time. When the true state of nature is S2, the research will accurately predict S2 80% of the time. What is the unconditional probability that the research predicts S1?
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