The EMV of a Decision with Three States of Nature

question 28

Essay

The EMV of a decision with three states of nature is $50. If the profit/value of A is 1/3 of B and B is 1/3 of C, determine the profit from A if all three states of nature are equally likely to occur.

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Definitions:

Trialability

The extent to which an innovation or product can be experimented with on a limited basis before it is fully adopted.

Observability

The degree to which the results of an innovation or change can be seen and understood by others, impacting its acceptance and diffusion.

Intrinsic Motivation

The drive to engage in activities for their own sake and personal rewards, rather than for some external compensation or pressure.

Top Management Support

The assistance and backing provided by senior executives to projects or initiatives, which is critical for their success.