The prior probabilities for s1 and s2 are P(s1)=0.8 and P(s2)=0.2. States of Nature Decision Alternative s1 s2 d1 15 10 d2 10 12 d3 8 20
The prior probabilities for s1 and s2 are P(s1)=0.8 and P(s2)=0.2. States of Nature Decision Alternative s1 s2 d1 15 10 d2 10 12 d3 8 20
Calculus For The Life Sciences
2nd Edition
ISBN:9780321964038
Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Publisher:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Chapter13: Probability And Calculus
Section13.3: Special Probability Density Functions
Problem 46E
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Consider the following profit payoff table.
The prior probabilities for s1 and s2 are P(s1)=0.8 and P(s2)=0.2.
States of Nature | ||
Decision Alternative | s1 | s2 |
d1 | 15 | 10 |
d2 | 10 | 12 |
d3 | 8 | 20 |
a. What is the optimal decision?
b. Find the EVPI.
c. Suppose that sample information I is obtained, with P(I|s1)=0.20 and P(I|s2)=0.75. Find the posterior probabilities P(s1|I) and P(s2|I). Recommend a decision alternative based on these probabilities.
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