The following payoff table provides profits based on various possible decision alternatives and various levels of demand. The probability of a low demand is 0.4, while the probability of a medium and high demand is each 0.3.
(a) What decision would an optimist make?
(b) What decision would a pessimist make?
(c) What is the highest possible expected monetary value?
(d) Calculate the expected value of perfect information for this situation.

Question

The following payoff table provides profits based on various possible decision alternatives and various levels of demand.  The probability of a low demand is 0.4, while the probability of a medium and high demand is each 0.3.
(a) What decision would an optimist make?
(b) What decision would a pessimist make?
(c) What is the highest possible expected monetary value?
(d) Calculate the expected value of perfect information for this situation.

Quizplus · Accepted Answer

The Answer of The following payoff table provides profits based on various possible decision alternatives and various levels of demand.  The probability of a low demand is 0.4, while the probability of a medium and high demand is each 0.3.
(a) What decision would an optimist make?
(b) What decision would a pessimist make?
(c) What is the highest possible expected monetary value?
(d) Calculate the expected value of perfect information for this situation.

The Following Payoff Table Provides Profits Based on Various Possible