A Payoff Table Is Shown Below The Following Prior Probabilities Are Assigned to the States of }
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question 19

Essay

A payoff table is shown below: $\begin{array} { ccc }&\text { Alternative }\\\text { State of Nature }& a_{1} & a_{2} & a_{3}& a_{4}\\s_{1} & 7 & 0 & 4 & 6 \\s_{2} & 2 & 4 & 3 & 5\end{array}$
The following prior probabilities are assigned to the states of nature:
P( $S _ { 1 }$ ) = 0.3, P( $S _ { 2 }$ ) = 0.7.
a. Calculate the expected monetary value for each act with present information. What decision should be made using the EMV criterion?
b. Convert the payoff table to an opportunity loss table.
c. Calculate the expected opportunity loss for each act with present information. What decision should be made using the EOL criterion?
d. What is the expected payoff with perfect information?
e. What is the expected value of perfect information?

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Definitions:

Defectors

People who abandon their allegiance, organization, or principles, often moving to an opposing side or withdrawing support.

Defence Mechanisms

Psychological strategies used unconsciously by individuals to protect themselves from anxiety and the perception of internal/external threats.

Change Stage

A phase within a process of transformation or transition which an individual, group, or organization moves through.

Organizational Learning

The process by which an organization improves itself over time through gaining experience and using that to create knowledge or efficiency gains.