In a certain state lottery, a lottery ticket costs $1. In termsof the decision to purchase or not to purchase a lottery ticket,suppose that the following payoff table applies:
I'm stummped.
I've tried 0.00033, 0.00003, 0.00030, 0.000033, 0.00001,0.00010, 0.00000 and it says those answers are all incorrect. I think the answer must be a larger number.
In A Certain State Lottery A Lottery Ticket Costs 1 In Terms Of The Decision To Purchase Or Not To Purchase A Lottery 1 (66.76 KiB) Viewed 11 times
Problem 13-27 (Algorithmic) In a certain state lottery, a lottery ticket costs $1. In terms of the decision to purchase or not to purchase a lottery ticket, suppose that the following payoff table applies: Decision Alternatives Purchase Lottery Ticket, d₁ Do Not Purchase Lottery Ticket, d₂ Recommended decision: Purchase Lottery Ticket Expected Value = $ 0.67 a. A realistic estimate of the chances of winning is 1 in 300,000. Use the expected value approach to recommend a decision. If required, round your answer to two decimal places. If the amount is zero enter "0". ✓ State of Nature Decision: Yes, Purchase Lottery Ticket Win S1 500000 0 ✓ Lose ✓ 52 -1 0 b. If a particular decision maker assigns an indifference probability of 0.00001 to the $0 payoff. Would this individual purchase a lottery ticket? Use expected utility to justify your answer. If required, round your answer to five decimal places. Expected Utility = 0.00033 X
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