Suppose we are interested in investing in one of three investment opportunities: d1, d2, or d3. The following profit payoff table shows the profits (in thousands of dollars) under each of the 3 possible economic conditions: s1, s2, and s3 Assume the states of nature have the following probabilities: P(s1) = 0.2, P(s2) = 0.3, P(s3) = 0.5. Which decision alternative is best?

Suppose we are interested in investing in one of three investment opportunities: d1, d2, or d3. The following profit payoff table shows the profits (in thousands of dollars) under each of the 3 possible economic conditions: s1, s2, and s3 Assume the states of nature have the following probabilities: P(s1) = 0.2, P(s2) = 0.3, P(s3) = 0.5. Which decision alternative is best?

College Algebra

7th Edition

ISBN:9781305115545

Author:James Stewart, Lothar Redlin, Saleem Watson

Publisher:James Stewart, Lothar Redlin, Saleem Watson

Chapter9: Counting And Probability

Section9.4: Expected Value

Problem 1E: If a game gives payoffs of $10 and $100 with probabilities 0.9 and 0.1, respectively, then the...

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Question

Suppose we are interested in investing in one of three investment opportunities: d₁, d₂, or d₃. The following profit payoff table shows the profits (in thousands of dollars) under each of the 3 possible economic conditions: s₁, s₂, and s₃

Assume the states of nature have the following probabilities: P(s₁) = 0.2, P(s₂) = 0.3, P(s₃) = 0.5. Which decision alternative is best?

Suppose we are interested in investing in one of three investment opportunities: d₁, d₂, or d3. The following profit payoff table shows the profits (in thousands of dollars) under each of the 3 possible economic conditions: S1, S2.
and $3.
Decision Alternative
O d₁
di
d₂
d3
O d₂
States of Nature
52
28
60
40
Assume the states of nature have the following probabilities: P(s) - 0.2, P(52) - 0.3, P(53) - 0.5. Which decision alternative is best?
Od3
O They are equal
51
38
80
15
53
28
-10
16

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