Q26 Q26 Q26

Consider the payoff table in problem 7.Suppose that the probabilities of states of nature S2 and S3 occurring are equal and that the probability of state of nature S4 occurring is .50.If the probability of state of nature S1 occurring is three times the probability of state of nature S2 occurring, the optimal decision under the expected value criterion is:

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Multiple Choice

Q31 Q31 Q31

Consider the following payoff table in which D1 through D4 represent decisions, S1 through S4 represent states of nature, and the values in the cells represent profits. Suppose that each state of nature is equally likely to occur.The expected value of perfect information is:

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Multiple Choice

Q32 Q32 Q32

Consider the payoff table in problem 16.Suppose that each state of nature is equally likely to occur and that two indicators, I1 and I2, are possible.The conditional probabilities for indicator I1 given the states of nature are as follows: P(I1|S1) = .1, P(I1|S2) = .2, P(I1|S3) = .3, and P(I1|S4) = .4.The expected value of sample information is:

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Multiple Choice

Q33 Q33 Q33

Consider a decision making problem with three states of nature: S1, S2, and S3, for which P(S1) = .1 and P(S2) = .3.Suppose also that there are two possible sample indicators, I1 and I2, and the following conditional probabilities hold: P(I1|S1) = .2, P(I1|S2) = .4, and P(I1|S3) = .6.The P(S2|I2) is:

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