For the Payoff Table Below,the Decision Maker Will Use P(s₁)=

question 42

Essay

For the payoff table below,the decision maker will use P(s₁)= .15,P(s₂)= .5,and P(s₃)= .35.

a.What alternative would be chosen according to expected value?
b.For a lottery having a payoff of 40,000 with probability p and -15,000 with probability (1-p),the decision maker expressed the following indifference probabilities.

Let U(40,000)= 10 and U(-15,000)= 0 and find the utility value for each payoff.
c.What alternative would be chosen according to expected utility?

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