The Alternatives 1 and 2 in the Following Payoff Table $\text { States of nature }$

question 67

Essay

The alternatives 1 and 2 in the following payoff table represent the two possible manufacturing strategies that the EKA manufacturing company can adopt. The level of demand affects the success of both strategies. The states of nature (Si, i = 1, 2, 3) represent the levels of demand for the company products. S1, S2 and S3 characterize high, medium, and low demand, respectively. The payoff values are in thousands of dollars.
$\text { States of nature }$
$\begin{array} { | l | r | r | r | } \hline \text { Alternatives } & \mathbf { s } _ { \mathbf { 1 } } & \mathbf { s } _ { \mathbf { 2 } } & \mathbf { s } _ { \mathbf { 3 } } \\\hline \text { Strategy 1 } & 110 & 80 & 70 \\\hline \text { Strategy 2 } & 60 & 120 & 50 \\\hline\end{array}$
-What is the maximum amount that the company would be willing to pay for perfect information?

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Definitions:

Phonological Loop

A component of working memory model that deals with the auditory information, playing a key role in the processing and storage of verbal and auditory data.

Visuospatial Sketchpad

A component of working memory responsible for the temporary storage and manipulation of visual and spatial information.

Short-Term Memory

The part of the memory system that is responsible for holding small amounts of information in an active, readily available state for a short duration.

Chunking

A cognitive strategy for making more efficient use of short-term memory by grouping related items together into a single unit or "chunk."