The following payoff table shows the profit for a decision problem with two states of nature and two decision alternativ

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The Following Payoff Table Shows The Profit For A Decision Problem With Two States Of Nature And Two Decision Alternativ 1 (37.49 KiB) Viewed 32 times

The following payoff table shows the profit for a decision problem with two states of nature and two decision alternatives. State of Nature Decision Alternative si S2 d1 12 3 d) 6 5 (a) Suppose P(52) = 0.2 and P(52) = 0.8. What is the best decision using the expected value approach? The best decision is d with an expected value of 5.2 (b) Perform sensitivity analysis on the payoffs for decision alternative d . Assume the probabilities are as given in part (a), and find the range of payoffs under states of nature s, and s2 that will keep the solution found in part (a) optimal. As long as the payoff for s, under diss 4 x , then the solution found in part (a) will be optimal. As long as the payoff for sy under diss V 4.5 x , then the solution found in part (a) will be optimal.