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Rank the decision alternatives on the basis of expected value and on the basis of expected utility.

Rank the decision alternatives on the basis of expected value and on the basis of expected utility.

College Algebra
College Algebra
7th Edition
ISBN:9781305115545
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
Chapter9: Counting And Probability
Section9.4: Expected Value
Problem 1E: If a game gives payoffs of $10 and $100 with probabilities 0.9 and 0.1, respectively, then the...
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7) A decision maker who is considered to be a risk taker is faced with this set of probabilities and payoffs. d₁ d₂ d3 probabilit y Requested: 55253 -50 -10 -25 .30 Payoff Probability 50 .60 20 10 5 0 S2 10 For the lottery p (80) + (1 - p) (-50), this decision maker has assessed the following indifference probabilities. 35 25 .22 .20 .18 .10 0 -10 .35 S3 20 50 80 .35 Rank the decision alternatives on the basis of expected value and on the basis of expected utility.
Transcribed Image Text:7) A decision maker who is considered to be a risk taker is faced with this set of probabilities and payoffs. d₁ d₂ d3 probabilit y Requested: 55253 -50 -10 -25 .30 Payoff Probability 50 .60 20 10 5 0 S2 10 For the lottery p (80) + (1 - p) (-50), this decision maker has assessed the following indifference probabilities. 35 25 .22 .20 .18 .10 0 -10 .35 S3 20 50 80 .35 Rank the decision alternatives on the basis of expected value and on the basis of expected utility.
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