The career counselor at Mountain Peak College has a tough job. She is expected to provide information to help students decide which major they should take. The counselor knows that she can use quantitative analysis to help her with her work. She did a survey and came up with six most popular degree programs at her college. One of the biggest factors she considered was the “earning” power of the degree in four different economic conditions. The table below presents the information she collected on the degree programs. The amounts shown are 3-year gross salaries of the alumni she surveyed. During recession: Game design engineer = $145k Nursing = $150k Hospitality = $115k Business = $130k Biotechnology = $115k Computer Science = $125k During average economy: Game design engineer = $175k Nursing = $180k Hospitality = $165k Business = $180k Biotechnology = $145k Computer Science = $150k During good economy: Game design engineer = $220k Nursing = $205k Hospitality = $220k Business = $210k Biotechnology = $235k Computer Science = $190k During a bullish economy: Game design engineer = $260k Nursing = $215k Hospitality = $320k Business = $280k Biotechnology = $305k Computer Science = $250k The college offered to pay for a projection of the probability of each economic condition over the next 3 years. The research company estimated that: P(recession) = 0.20; P(average economy) = 0.40; P(good economy) = 0.30; P(bullish economy) = 0.10 What you need to do: 1) Build the payoff table showing the 3-year gross salaries of the different careers. 2) Determine the best degree program in terms of the projected gross salary using the following approaches: Maximax Laplace Hurwicz (α=.50) Expected value 3) Determine what degree program the career counselor should recommend to the students. Explain your reasoning.
The career counselor at Mountain Peak College has a tough job. She is expected to provide information to help students decide which major they should take. The counselor knows that she can use quantitative analysis to help her with her work. She did a survey and came up with six most popular degree programs at her college. One of the biggest factors she considered was the “earning” power of the degree in four different economic conditions. The table below presents the information she collected on the degree programs. The amounts shown are 3-year gross salaries of the alumni she surveyed.
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During recession: Game design engineer = $145k Nursing = $150k Hospitality = $115k Business = $130k Biotechnology = $115k Computer Science = $125k |
During average economy: Game design engineer = $175k Nursing = $180k Hospitality = $165k Business = $180k Biotechnology = $145k Computer Science = $150k |
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During good economy: Game design engineer = $220k Nursing = $205k Hospitality = $220k Business = $210k Biotechnology = $235k Computer Science = $190k |
During a bullish economy: Game design engineer = $260k Nursing = $215k Hospitality = $320k Business = $280k Biotechnology = $305k Computer Science = $250k |
The college offered to pay for a projection of the probability of each economic condition over the next 3 years. The research company estimated that:
P(recession) = 0.20; P(average economy) = 0.40; P(good economy) = 0.30; P(bullish economy) = 0.10
What you need to do:
1) Build the payoff table showing the 3-year gross salaries of the different careers.
2) Determine the best degree program in terms of the projected gross salary using the following approaches:
-
- Maximax
- Laplace
- Hurwicz (α=.50)
- Expected value
3) Determine what degree program the career counselor should recommend to the students. Explain your reasoning.
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