Probability And Statistical Inference (10th Edition)
10th Edition
ISBN: 9780135189399
Author: Robert V. Hogg, Elliot Tanis, Dale Zimmerman
Publisher: PEARSON
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Chapter 1.1, Problem 13E
Divide a line segment into two parts by selecting a point at random. Use your intuition to assign a
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Starting with the finished version of Example 6.2, attached, change the decision criterion to "maximize expected utility," using an exponential utility function with risk tolerance $5,000,000. Display certainty equivalents on the tree.
a. Keep doubling the risk tolerance until the company's best strategy is the same as with the EMV criterion—continue with development and then market if successful.
The risk tolerance must reach $ 160,000,000 before the risk averse company acts the same as the EMV-maximizing company.
b. With a risk tolerance of $320,000,000, the company views the optimal strategy as equivalent to receiving a sure $____________ , even though the EMV from the original strategy (with no risk tolerance) is $ 59,200.
Starting with the finished version of Example 6.2, attached, change the decision criterion to "maximize expected utility," using an exponential utility function with risk tolerance $5,000,000. Display certainty equivalents on the tree.
a. Keep doubling the risk tolerance until the company's best strategy is the same as with the EMV criterion—continue with development and then market if successful.
The risk tolerance must reach $ ____________ before the risk averse company acts the same as the EMV-maximizing company.
b. With a risk tolerance of $320,000,000, the company views the optimal strategy as equivalent to receiving a sure $____________ , even though the EMV from the original strategy (with no risk tolerance) is $ ___________ .
A television network earns an average of $14 million each season from a hit program and loses an average of $8 million each season on a program that turns out to be a flop. Of all programs picked up by this network in recent years, 25% turn out to be hits and 75% turn out to be flops. At a cost of C dollars, a market research firm will analyze a pilot episode of a prospective program and issue a report predicting whether the given program will end up being a hit. If the program is actually going to be a hit, there is a 75% chance that the market researchers will predict the program to be a hit. If the program is actually going to be a flop, there is only a 30% chance that the market researchers will predict the program to be a hit.
What is the maximum value of C that the network should be willing to pay the market research firm? Enter your answer in dollars, not in million dollars.
$ __________
Calculate EVPI for this decision problem. Enter your answer in dollars, not in million…
Chapter 1 Solutions
Probability And Statistical Inference (10th Edition)
Ch. 1.1 - Of a group of patients having injuries, 28% visit...Ch. 1.1 - An insurance company looks at its auto insurance...Ch. 1.1 - Draw one card at random from a standard deck of...Ch. 1.1 - A fair coin is tossed four times, and the sequence...Ch. 1.1 - Consider the trial on which a 3 is first observed...Ch. 1.1 - If P(A)=0.5,P(B)=0.6, and P(AB)=0.4, find (a)...Ch. 1.1 - Given that P(AB)=0.76 and P(AB)=0.87, find P(A).Ch. 1.1 - During a visit to a primary care physicians...Ch. 1.1 - Roll a fair six-sided die three times. Let...Ch. 1.1 - Prove Theorem 1.1-6.
Ch. 1.1 - A typical roulette wheel used in a casino has 38...Ch. 1.1 - Let x equal a number that is selected randomly...Ch. 1.1 - Divide a line segment into two parts by selecting...Ch. 1.1 - Let the interval [r,r] be the base of a...Ch. 1.1 - Let S=A1A2...Am, where events A1,A2,...,Am are...Ch. 1.1 - Let pn,n=0,1,2..., be the probability that an...Ch. 1.2 - A combination lock was left at a fitness center....Ch. 1.2 - In designing an experiment, the researcher can...Ch. 1.2 - How many different license plates are possible if...Ch. 1.2 - The eating club is hosting a make-your-own sun-dae...Ch. 1.2 - How many four-letter code words are possible using...Ch. 1.2 - Suppose that Novak Djokovic and Roger Federer are...Ch. 1.2 - In a state lottery, four digits are drawn at...Ch. 1.2 - How many different varieties of pizza can be made...Ch. 1.2 - The World Series in baseball continues until...Ch. 1.2 - Pascals triangle gives a method for calculating...Ch. 1.2 - Three students (S) and six faculty members (F) are...Ch. 1.2 - Prove: r=0n(1)r(nr)=0andr=0n(nr)=2n HINT: Consider...Ch. 1.2 - A bridge hand is found by taking 13 cards at...Ch. 1.2 - At the end of a semester, 29 students in a...Ch. 1.2 - Prove Equation 1.2-2. HINT: First selectn1...Ch. 1.2 - A box of candy hearts contains 52 hearts, of which...Ch. 1.2 - A poker hand is defined as drawing five cards at...Ch. 1.2 - For each positive integer n, let P({n})=(12)n....Ch. 1.3 - A common screening test for 1-IIV is called the...Ch. 1.3 - The following table classifies 1456 people by...Ch. 1.3 - Let A1 and A2 be the events that a person is left-...Ch. 1.3 - Two cards are drawn successively and without...Ch. 1.3 - Suppose that the gene for eye color for a certain...Ch. 1.3 - A researcher finds that, of 982 men who died in...Ch. 1.3 - An urn contains four colored halls: two orange and...Ch. 1.3 - An urn contains 17 balls marked LOSE and three...Ch. 1.3 - An urn contains four balls numbered 1 through 4....Ch. 1.3 - A single card is drawn at random from each of six...Ch. 1.3 - Consider the birthdays of the students in a class...Ch. 1.3 - You are a member of a class of 18 students. A bowl...Ch. 1.3 - In the gambling game craps. two dice are rolled...Ch. 1.3 - Some albatrosses return to the worlds only...Ch. 1.3 - An urn contains eight red and seven blue balls. A...Ch. 1.3 - Bowl A contains three red and two white chips, and...Ch. 1.4 - Let A and B be independent events with P(A)=0.7...Ch. 1.4 - Let P(A)=0.3 and P(B)=0.6. (a) Find P(AB) when A...Ch. 1.4 - Let A and B be independent events with P(A)=14 and...Ch. 1.4 - Prove parts (b) and (c) of Theorem 1.4-1.Ch. 1.4 - If P(A)=0.8,P(B)=0.5, and P(AB)=0.9, are A and B...Ch. 1.4 - Show that if A, B, and C are mutually independent,...Ch. 1.4 - Each of three football players will attempt to...Ch. 1.4 - Die A has orange on one face and blue on five...Ch. 1.4 - Suppose that A, B, and C are mutually independent...Ch. 1.4 - Let D1,D2,D3 be three four-sided dice whose sides...Ch. 1.4 - Let A and B be two events. (a) If the events A and...Ch. 1.4 - Flip an unbiased coin five independent times....Ch. 1.4 - An urn contains two red balls and four white...Ch. 1.4 - In Example 1.4-5, suppose that the probability of...Ch. 1.4 - An urn contains ten red and ten white balls. The...Ch. 1.4 - An urn contains five balls, one marked WIN and...Ch. 1.4 - Each of the 12 students in a class is given a fair...Ch. 1.4 - An eight-team single-elimination tournament is set...Ch. 1.4 - Extend Example 1.4-6 to an n-sided die. That is,...Ch. 1.4 - Hunters A and B shoot at a target with...Ch. 1.4 - There are eight major blood types, whose...Ch. 1.5 - Bowl B1 contains two white chips, bowl B2 contains...Ch. 1.5 - Bean seeds from supplier A have an 85% germination...Ch. 1.5 - A doctor is concerned about the relationship...Ch. 1.5 - Assume that an insurance company knows the...Ch. 1.5 - At a hospitals emergency room, patients are...Ch. 1.5 - A life insurance company issues standard,...Ch. 1.5 - A chemist wishes to detect an impurity in a...Ch. 1.5 - A store sells four brands of tablets. The least...Ch. 1.5 - There is a new diagnostic test for a disease that...Ch. 1.5 - Prob. 10ECh. 1.5 - At the beginning of a certain study of a group of...Ch. 1.5 - Two processes of a company produce rolls of...Ch. 1.5 - A hospital receives 40% of its flu vaccine from...
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