Suppose that you receive an imperfect signal about the condition of the economy and make a decision afterwards. That means, when economy will be good you receive a positive signal with probability 0.6 and when economy will be bad, you receive a negative signal with probability 0.8. Find the EMV based on the imperfect signal mentioned above (i.e., that minimizes the expected cost). (Please enter the value with two decimal digits without rounding. For example, if you answer is 2.7894, please enter 2.78).
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.
Suppose that you receive an imperfect signal about the condition of the economy and make a decision afterwards. That means, when economy will be good you receive a positive signal with
Find the EMV based on the imperfect signal mentioned above (i.e., that minimizes the expected cost). (Please enter the value with two decimal digits without rounding. For example, if you answer is 2.7894, please enter 2.78).
Please refer to the decision tree attached in the image
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