Problem 4: Continuing with problem 3, a firm open to conduct a market research involving the proposed venture and using analytical tools can give an accurate information, thus gave the following info: Probability of a favorable market given a favorable study is 0.82 Probability of an unfavorable market given a favorable study is 0.18 Probability of a favorable market given an unfavorable study is 0.11 Probability of an unfavorable market given an unfavorable study is 0.89 Probability of a favorable research study is 0.55 Probability of an unfavorable research study is 0.45 Required: Develop a new decision tree for the doctors to reflect the options now open with the market study. Use the EMV approach to recommend a strategy. What is the expected value of information?

Problem 4: Continuing with problem 3, a firm open to conduct a market research involving the proposed venture and using analytical tools can give an accurate information, thus gave the following info: Probability of a favorable market given a favorable study is 0.82 Probability of an unfavorable market given a favorable study is 0.18 Probability of a favorable market given an unfavorable study is 0.11 Probability of an unfavorable market given an unfavorable study is 0.89 Probability of a favorable research study is 0.55 Probability of an unfavorable research study is 0.45 Required: Develop a new decision tree for the doctors to reflect the options now open with the market study. Use the EMV approach to recommend a strategy. What is the expected value of information?

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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Question

Problem 4:

Continuing with problem 3, a firm open to conduct a market research involving the proposed venture and using analytical tools can give an accurate information, thus gave the following info:

Probability of a favorable market given a favorable study is 0.82

Probability of an unfavorable market given a favorable study is 0.18

Probability of a favorable market given an unfavorable study is 0.11

Probability of an unfavorable market given an unfavorable study is 0.89

Probability of a favorable research study is 0.55

Probability of an unfavorable research study is 0.45

Required:

Develop a new decision tree for the doctors to reflect the options now open with the market study.
Use the EMV approach to recommend a strategy.
What is the expected value of information?

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