The EMV of a Decision with Three States of Nature

question 5

Essay

The EMV of a decision with three states of nature is $33,000. If the profit/value under the states of nature A, B, and C is $10,000, $20,000, and $50,000, respectively, and states B and C have equal probabilities, determine the likelihood of state of nature A.

---

Definitions:

Tympanic Membrane

The eardrum; a thin membrane that separates the outer ear from the middle ear and vibrates in response to sound waves.

Fungal Infection

An invasion of one or more species of fungi on parts of the body, which can cause a variety of symptoms depending on the area affected.

Light Reflex

The reaction of the pupil to light, either by contracting in response to increased light exposure or dilating in dim light, aiding in the diagnosis of neurological conditions.

Wechsler Adult Intelligence Scale

A standardized test designed to measure the intelligence of adults and older adolescents, comprising various verbal and performance subtests.