Refer to the Following Payoff Table

question 56

Multiple Choice

Refer to the following payoff table:

There is an option of paying $100 to have research done to better predict which state of nature will occur. When the true state of nature is S1, the research will accurately predict S1 60% of the time. When the true state of nature is S2, the research will accurately predict S2 80% of the time.
Given that the research is done, what is the expected payoff using Bayes' decision rule?

• A) −82
• B) −44
• C) 0
• D) 29
• E) 40

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Definitions:

Videotaped Conversation

A recorded interaction between individuals on video, used for analysis or study.

Equal Participation

The concept that all members of a group have the same opportunity and responsibility to contribute to a process or activity.

Self-Handicapping

A cognitive strategy by which people avoid effort in the hopes of keeping potential failure from hurting self-esteem.

Disadvantage

A circumstance or condition that unfavorably affects someone, reducing their chances of success.