The Head of Operations for a Movie Studio Wants to Determine

question 70

Multiple Choice

The head of operations for a movie studio wants to determine which of two new scripts they should select for their next major production. (Due to budgeting constraints, only one new picture can be undertaken at this time.) She feels that script 1 has a 70 percent chance of earning about $10,000,000 over the long run, but a 30 percent chance of losing $2,000,000. If this movie is successful, then a sequel could also be produced, with an 80 percent chance of earning $5,000,000, but a 20 percent chance of losing $1,000,000. On the other hand, she feels that script 2 has a 60 percent chance of earning $12,000,000, but a 40 percent chance of losing $3,000,000. If successful, its sequel would have a 50 percent chance of earning $8,000,000, but a 50 percent chance of losing $4,000,000. Of course, in either case, if the original movie were a flop, then no sequel would be produced.
What is the expected value of selecting script 1?

• A)$15,000,000
• B)$9,060,000
• C)$8,400,000
• D)$7,200,000
• E)$6,000,000

---

Definitions:

Emotion Script

Predefined patterns or sequences of emotional responses expected in certain situations or contexts.

Somatic Marker Hypothesis

The theory that emotional processes guide (or bias) behavior, particularly decision-making, via bodily feelings.

Brain Injury

This refers to any damage to the brain that affects its functions, which can result from trauma, stroke, or other health conditions, leading to varying degrees of impairment.

Arousal Levels

The degree of physiological and psychological wakefulness or alertness a person experiences.