The government is attempting to determine whetherimmigrants should be tested for a contagious disease. Let’sassume that the decision will be made on a financial basis.Assume that each immigrant who is allowed into the countryand has the disease costs the United States $100,000, andeach immigrant who enters and does not have the diseasewill contribute $10,000 to the national economy. Assumethat 10% of all potential immigrants have the disease. Thegovernment may admit all immigrants, admit no immigrants,or test immigrants for the disease before determiningwhether they should be admitted. It costs $100 to test aperson for the disease; the test result is either positive ornegative. If the test result is positive, the person definitelyhas the disease. However, 20% of all people who do havethe disease test negative. A person who does not have thedisease always tests negative. The government’s goal is tomaximize (per potential immigrant) expected benefits minusexpected costs. Use a decision tree to aid in this undertaking.Also determine EVSI and EVPI.

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Chapter1: Combinatorial Analysis
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The government is attempting to determine whether
immigrants should be tested for a contagious disease. Let’s
assume that the decision will be made on a financial basis.
Assume that each immigrant who is allowed into the country
and has the disease costs the United States $100,000, and
each immigrant who enters and does not have the disease
will contribute $10,000 to the national economy. Assume
that 10% of all potential immigrants have the disease. Thegovernment may admit all immigrants, admit no immigrants,
or test immigrants for the disease before determining
whether they should be admitted. It costs $100 to test a
person for the disease; the test result is either positive or
negative. If the test result is positive, the person definitely
has the disease. However, 20% of all people who do have
the disease test negative. A person who does not have the
disease always tests negative. The government’s goal is to
maximize (per potential immigrant) expected benefits minus
expected costs. Use a decision tree to aid in this undertaking.
Also determine EVSI and EVPI.

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why is the EVWOI =0?

 

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