The following payoff table shows the profit for a decision problem with two states of nature a vo decision alternatives. Decision Alternative d₁ State of Nature $1 11 052 5 As long as the payoff for s₁ under d₁ is $2 (a) Suppose P(S₁) = 0.2 and P(S₂) = 0.8. What is the best decision using the expected value approach? The best decision is --?-- with an expected value of 2 (b) Perform sensitivity analysis on the payoffs for decision alternative d₁. Assume the probabilities are as given in part (a), a solution found in part (a) optimal. -?-- 4 As long as the payoff for $2 under d₁ is --?--v Is the solution more sensitive to the payoff under state of nature s₁ or $₂? O $₁ then the solution found in part (a) will be optimal. then the solution found in part (a) will be optimal. I
The following payoff table shows the profit for a decision problem with two states of nature a vo decision alternatives. Decision Alternative d₁ State of Nature $1 11 052 5 As long as the payoff for s₁ under d₁ is $2 (a) Suppose P(S₁) = 0.2 and P(S₂) = 0.8. What is the best decision using the expected value approach? The best decision is --?-- with an expected value of 2 (b) Perform sensitivity analysis on the payoffs for decision alternative d₁. Assume the probabilities are as given in part (a), a solution found in part (a) optimal. -?-- 4 As long as the payoff for $2 under d₁ is --?--v Is the solution more sensitive to the payoff under state of nature s₁ or $₂? O $₁ then the solution found in part (a) will be optimal. then the solution found in part (a) will be optimal. I
A First Course in Probability (10th Edition)
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![The following payoff table shows the profit for a decision problem with two states of nature anwo decision alternatives.
Decision Alternative
d₁
d₂
052
Submit Answer
- [-/6 Points]
State of Nature
$1
11
5
(a) Suppose P(s) = 0.2 and P(s₂) = 0.8. What is the best decision using the expected value approach?
The best decision is --?--✓ with an expected value of
DETAILS
$2
(b) Perform sensitivity analysis on the payoffs for decision alternative d₁. Assume the probabilities are as given in part (a), an
solution found in part (a) optimal.
2
As long as the payoff for s, under d, is |--?-- ▼
1
4
As long as the payoff for s, under d₁ is --?-- v
2
Is the solution more sensitive to the payoff under state of nature s₁ or s₂?
O 51
then the solution found in part (a) will be optimal.
then the solution found in part (a) will be optimal.
CAMMIMS16 14.E.015.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc69c41cd-804d-4934-acb6-8565fddeca40%2Ff8463408-e891-4933-8bc5-88f7ce0ec08a%2F76oyp5_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The following payoff table shows the profit for a decision problem with two states of nature anwo decision alternatives.
Decision Alternative
d₁
d₂
052
Submit Answer
- [-/6 Points]
State of Nature
$1
11
5
(a) Suppose P(s) = 0.2 and P(s₂) = 0.8. What is the best decision using the expected value approach?
The best decision is --?--✓ with an expected value of
DETAILS
$2
(b) Perform sensitivity analysis on the payoffs for decision alternative d₁. Assume the probabilities are as given in part (a), an
solution found in part (a) optimal.
2
As long as the payoff for s, under d, is |--?-- ▼
1
4
As long as the payoff for s, under d₁ is --?-- v
2
Is the solution more sensitive to the payoff under state of nature s₁ or s₂?
O 51
then the solution found in part (a) will be optimal.
then the solution found in part (a) will be optimal.
CAMMIMS16 14.E.015.
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