In choosing between three new jobs, Joe MBA considers the potential payoffs over the next three years. The following table contains the payoffs, given the speed of promotion in each of the organizations. The probability of fast promotion is 0.6, and the probability of slow promotion is 0.4.
$$\begin{array} { | l | l | l | }
\text { Alternative } & \text { Slow Promotion } & \begin{array} { l }
\text { Fast } \
\text { Promotion }
\end{array} \
\hline \text { A High-flying consultant } & ( \$ 180,000 ) & \$ 600,000 \
\text { B. Utility analyst } & \$ 200,000 & \$ 400,000 \
\text { C. Research assistant } & \$ 250,000 & \$ 260,000 \
\hline
\end{array}$$
-Use the information in Table A.3 and the Laplace decision rule.The weighted payoff is
A) less than $200,000 if the high-flying consultant job is selected.
B) more than $280,000 if the Research Assistant job is selected.
C) more than $280,000 if the utility analyst job is selected.
D) highest for the research assistant position.

Question

In choosing between three new jobs, Joe MBA considers the potential payoffs over the next three years. The following table contains the payoffs, given the speed of promotion in each of the organizations. The probability of fast promotion is 0.6, and the probability of slow promotion is 0.4.
 $$\begin{array} { | l | l | l | } 
\text { Alternative } & \text { Slow Promotion } & \begin{array} { l } 
\text { Fast } \
\text { Promotion }
\end{array} \
\hline \text { A High-flying consultant } & ( \$ 180,000 ) & \$ 600,000 \
\text { B. Utility analyst } & \$ 200,000 & \$ 400,000 \
\text { C. Research assistant } & \$ 250,000 & \$ 260,000 \
\hline
\end{array}$$
-Use the information in Table A.3 and the Laplace decision rule.The weighted payoff is
A) less than $200,000 if the high-flying consultant job is selected.
B) more than $280,000 if the Research Assistant job is selected.
C) more than $280,000 if the utility analyst job is selected.
D) highest for the research assistant position.

Quizplus · Accepted Answer

The expected payoff for each job is calculated by multiplying the payoffs by their respective probabilities and summing them. For the utility analyst job, the expected payoff is $200,000 * 0.4 + $400,000 * 0.6 = $320,000, which is more than $280,000.

In Choosing Between Three New Jobs, Joe MBA Considers the Potential