Three Decision Makers Have Assessed Utilities for the Problem Whose

question 48

Essay

Three decision makers have assessed utilities for the problem whose payoff table appears below. $$\begin{array} { c | c c c } & &{ \text { State of Nature } } \\\text { Decision } & s _ { 1 } & s _ { 2 } & s _ { 3 } \\\hline d _ { 1 } & 500 & 100 & - 400 \\d _ { 2 } & 200 & 150 & 100 \\d _ { 3 } & - 100 & 200 & 300 \\\hline \text { Probability } & .2 & .6 & .2\end{array}$$ $$\begin{array}{l}\begin{array} { r c c c } &&&&\underline{\text { Indifference Probability for Person }}\\\text { Payoff } &&& \text { A } & \text { B } & \text { C } \\\hline 300 &&& .95 & .68 & .45 \\200 &&& .94 & .64 & .32 \\150 &&& .91 & .62 & .28 \\100 &&& .89 & .60 & .22 \\- 100 &&& .75 & .45 & .10\end{array}\end{array}$$
a.Plot the utility function for each decision maker.
b.Characterize each decision maker's attitude toward risk.
c.Which decision will each person prefer?

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Definitions:

Sense of Pride

A feeling of deep satisfaction derived from one's own achievements, the achievements of those with whom one is closely associated, or from qualities or possessions that are widely admired.

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the feeling of sadness or displeasure caused by the nonfulfillment of one's hopes or expectations.

Baby Boom

The significant increase in birth rates observed in various countries, notably the United States, during the post-World War II period, roughly between 1946 and 1964.

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Refers to married or committed partners where at least one person is serving in the armed forces, often facing unique challenges such as deployments and relocations.