1. Alice is a young lady deciding on the next stage of her life. She can either

Question

1. Alice is a young lady deciding on the next stage of her life. She can either go to the University of Quality or Real World University, both of which are located in her hometown. Alternatively, she can start working and gain some working experience. She is not very sure of her ability, though. There are two states of the world to her: that she is school smart, or that she is street smart. Alice's state-contingent payoffs are as follows: School Smart Street Smart Univ. Quality Real World U Work 10 (a) (Level A) Does Alice has any (strongly or weakly) dominant choice? (b) (Level A) Does Alice has any (strongly or weakly) dominated choice(s)? (c) (Level A) Suppose Alice assigns probability 0.4 to her being School Smart, 06 to her being Street Simart. Calculate the espected utility from each of her choices. Which choice will she pick? (d) (Level C) In general, let p be the probability Alice assigns to her being Street Smart. Plot the expected utility from each of her choices as a function of p in the same graph. To help you get started, the expected utility from Univ

Explanation / Answer

A) No Alice dont have dominant strategy

B)Yes, Alice have dominated strategy as real World U

C)expected utility from University Quality=0.4(10)+0.6(2)=4+1.2=5.2

Expected utility from Real World U=0.4(7)+0.6(5)=5.8

Expected utility from Work=0.4(0)+0.6(8)=4.8

D)expected utility froM Real world=7p+5(1-p)

Expected utility from work=8(1-p)

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.