The Prime Minister of Alderaan currently heads a minority government in parliament (I.e., his party has the most seats, but does not have an absolute majority). The Prime Minister is considering calling an early election in an attempt to gain a majority of seats. Assume the status quo of a minority government gives 0 utility. An election might result in the Prime Minister getting a majority of seats, it might result in another minority government, or the opposition might win. The PM believes that they have a 40% chance of getting a majority, which would give them 50 utility relative to the status quo. They believe the opposition has a 30% chance of winning, which would give the PM -100 utility relative to the status quo. If neither the PM nor the opposition wins, the PM gets another minority government with 0 utility. (There are no additional costs of holding an election). What is the PM's expected utility of calling an election? Should they call an election or not?

The Prime Minister of Alderaan currently heads a minority government in parliament (I.e., his party has the most seats, but does not have an absolute majority). The Prime Minister is considering calling an early election in an attempt to gain a majority of seats. Assume the status quo of a minority government gives 0 utility. An election might result in the Prime Minister getting a majority of seats, it might result in another minority government, or the opposition might win. The PM believes that they have a 40% chance of getting a majority, which would give them 50 utility relative to the status quo. They believe the opposition has a 30% chance of winning, which would give the PM -100 utility relative to the status quo. If neither the PM nor the opposition wins, the PM gets another minority government with 0 utility. (There are no additional costs of holding an election). What is the PM's expected utility of calling an election? Should they call an election or not?

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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