The EMV of a Decision with Three States of Nature

question 92

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 and states B and C have equal probabilities, determine the likelihood of state of nature A.

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Definitions:

Relevant Attitudes

Refers to attitudes that are directly related to and influence an individual’s behavior or decision-making process in specific contexts.

Attitude Predictors

Factors or variables that can influence or forecast the direction and intensity of a person's attitude towards something.

Distorted Attitudes

Involves having skewed or inaccurately formed opinions that do not accurately reflect reality.

Predicting Behavior

The process of anticipating actions based on understanding of the factors that influence human decisions and patterns.