A decision maker faced with four decision alternatives and four states of nature develops the following profit payoff ta

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A Decision Maker Faced With Four Decision Alternatives And Four States Of Nature Develops The Following Profit Payoff Ta 1 (30.04 KiB) Viewed 34 times

A decision maker faced with four decision alternatives and four states of nature develops the following profit payoff table. Decision Alternative d₂ d₂ d₂ d₂ States of Nature in 13 10 8 00 N 00 Ev(d₂) Ev(d₂) Ev(d₂) EV(d₂) The optimal decision is d. 9 9 7 9 W 9 4 7 5 6 9 10 10 12 The decision maker obtains information that enables the following probabilities assessments: P(s) = 0.5, P(s) = 0.2. P(s) = 0.2, and P(s) = 0.1. (a) Use the expected value approach to determine the optimal decision. * (b) Now assume that the entries in the payoff table are costs. Use the expected value approach to determine the optimal decision. The optimal decision is d