Question

A decision maker who is considered to be a risk taker is faced with this set of probabilities State of Nature Decision s1 s2 s3 d1 5 10 20 d2 -25 0 50 d3 -50 -10 80 Probability .30 .35 .35 Rank the decision alternatives on the basis of expected value. Select one: a. d1, d3, d2 b. d3, d1, d2 c. d2, d3, d1 d. d1, d2, d3 

          A decision maker who is considered to be a risk taker is faced with this set of probabilities

State of Nature
Decision s1 s2 s3
d1 5 10 20
d2 -25 0 50
d3 -50 -10 80
Probability .30 .35 .35

Rank the decision alternatives on the basis of expected value.

Select one:
a. d1, d3, d2
b. d3, d1, d2
c. d2, d3, d1
d. d1, d2, d3
Show more…
A decision maker who is considered to be a risk taker is faced with this set of probabilities State of Nature Decision s1 s2 s3 d1 5 10 20 d2 -25 0 50 d3 -50 -10 80 Probability .30 .35 .35 Rank the decision alternatives on the basis of expected value. Select one: a. d1, d3, d2 b. d3, d1, d2 c. d2, d3, d1 d. d1, d2, d3

Added by Linda C.

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Elementary Statistics a Step by Step Approach
Elementary Statistics a Step by Step Approach
Allan G. Bluman 9th Edition
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A decision maker who is considered to be a risk taker is faced with this set of probabilities. Rank the decision alternatives on the basis of expected value. Select one: a. d1, d3, d2 b. d3, d1, d2 c. d2, d3, d1 d. d1, d2, d3
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Transcript

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00:01 We have to find the expected value of d1, which is 5 times 0 .3 plus 10 times 0 .35, plus 20 times 0 .35, which is equal to 12.
00:13 Then expected value of d2 is equal to minus 25 times 0 .3 plus 0 times 0 .35 plus 50 times 0 .35, which is equal to 10.
00:28 And the expected value of d3 is equal to minus 50 times 0 .3 plus minus 10 times 0 .35 plus 30 times 0 .35 which is equal to 9 .5...
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