Decision trees are sometimes used in decision-making. To determine how much a ma
ID: 3045799 • Letter: D
Question
Decision trees are sometimes used in decision-making. To determine how much a market research survey (or other type of information) is worth, you should compute:
the expected value with sample information.
the expected value of perfect information.
the expected value with perfect information.
the expected value of sample information
An investor is consider four different opportunities, A, B, C, or D. The payoff for each opportunity will depend on the economic conditions, represented in the payoff table below,
What decision would an optimist make?
average economic condition
investment C
investment B
investment D
If the probabilities of each economic condition listed in the table below are 0.5, 0.1, 0.35, and 0.05, respectively, what investment would be made using the expected value criterion?
investment C
investment D
investment A
investment B
A.the expected value with sample information.
B.the expected value of perfect information.
C.the expected value with perfect information.
D.the expected value of sample information
Explanation / Answer
the expected value of perfect information.
The EVPI is used to compute the cost of the survey.
Max survey cost= EVPI - Expected value without survey.
Second and third question is not visible due to external link
the expected value of perfect information.
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