A Decision Maker's Worst Option Has an Expected Value of $1,000

question 124

Multiple Choice

A decision maker's worst option has an expected value of $1,000, and her best option has an expected value of $3,000. With perfect information, the expected value would be $5,000. What is the expected value of perfect information?

• A)$5,000
• B)$4,000
• C)$3,000
• D)$2,000
• E)$1,000

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Definitions:

Normative Influence

The impact of norms, values, and expectations of society or a group on an individual's behavior.

Direct Influence

The immediate impact or control one individual or group has over another's actions or decisions.

Empirical

Based on, concerned with, or verifiable by observation or experience rather than theory or pure logic.

Theoretical

Pertaining to a system of ideas intended to explain phenomena, often abstract and not immediately practical.