TABLE 17-6
a Student Wanted to Find Out the Optimal

question 24

Short Answer

TABLE 17-6
A student wanted to find out the optimal strategy to study for a Business Statistics exam. He constructed the following payoff table based on the average amount of time he needed to put in every week studying for the course and the degree of difficulty of the exam. From the information that he gathered from students who had taken the course, he concluded that there was a 40% probability that the exam would be easy.
$$\begin{array} { | l | c | c | c | } \hline & \text { 16 hours } & 8 \text { hours } & \text { 4 hours } \\\hline \text { Easy Exam } & 40 & 60 & 80 \\\hline \text { Difficult Exam } & 100 & 50 & 0 \\\hline\end{array}$$
-Referring to Table 17-6, what is the maximum amount that the student is willing to pay to obtain perfect information?

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Definitions:

Housewives

Women who manage their households while not being employed outside the home, often taking care of children and performing domestic tasks.

Sunk Costs

Costs that have already been incurred and cannot be recovered, which should not influence ongoing decision-making but often do.

Foot-in-the-door Technique

A persuasion strategy in which agreeing to a small initial request increases the likelihood of agreeing to a second, larger request.

Electric Shocks

A method often used in psychology experiments to deliver a mild to severe stimulus to participants, sometimes to study pain response or learning.