The local operations manager for the IRS must decide whether to hire 1, 2, or 3 temporary workers. He estimates that net revenues (in thousands) will vary with how well taxpayers comply with the new tax code.
$$\begin{array} { c c c c }
\hline \text { \# of Workers } & \begin{array} { c }
\text { Low } \
\text { Compliance }
\end{array} & \begin{array} { c }
\text { Medium } \
\text { Compliance }
\end{array} & \begin{array} { c }
\text { High } \
\text { Compliance }
\end{array} \
\hline 1 & 50 & 50 & 50 \
2 & 100 & 60 & 20 \
3 & 150 & 70 & - 10 \
\hline
\end{array}$$
-If he thinks the chances of low, medium, and high compliance are 20%, 30%, and 50%, respectively, what is the expected value of perfect information?

Question

The local operations manager for the IRS must decide whether to hire 1, 2, or 3 temporary workers. He estimates that net revenues (in thousands) will vary with how well taxpayers comply with the new tax code.
 $$\begin{array} { c c c c } 
\hline \text { \# of Workers } & \begin{array} { c } 
\text { Low } \
\text { Compliance }
\end{array} & \begin{array} { c } 
\text { Medium } \
\text { Compliance }
\end{array} & \begin{array} { c } 
\text { High } \
\text { Compliance }
\end{array} \
\hline 1 & 50 & 50 & 50 \
2 & 100 & 60 & 20 \
3 & 150 & 70 & - 10 \
\hline
\end{array}$$
-If he thinks the chances of low, medium, and high compliance are 20%, 30%, and 50%, respectively, what is the expected value of perfect information?

Quizplus · Accepted Answer

The Answer of The local operations manager for the IRS must decide whether to hire 1, 2, or 3 temporary workers. He estimates that net revenues (in thousands) will vary with how well taxpayers comply with the new tax code.
 $$\begin{array} { c c c c } 
\hline \text { \# of Workers } & \begin{array} { c } 
\text { Low } \
\text { Compliance }
\end{array} & \begin{array} { c } 
\text { Medium } \
\text { Compliance }
\end{array} & \begin{array} { c } 
\text { High } \
\text { Compliance }
\end{array} \
\hline 1 & 50 & 50 & 50 \
2 & 100 & 60 & 20 \
3 & 150 & 70 & - 10 \
\hline
\end{array}$$
-If he thinks the chances of low, medium, and high compliance are 20%, 30%, and 50%, respectively, what is the expected value of perfect information?

The Local Operations Manager for the IRS Must Decide Whether