More Than 500 Scripted Television Series Were Available For Viewing In 2018 New Series Typically Start By Producing A P 1 (82.02 KiB) Viewed 29 times
More Than 500 Scripted Television Series Were Available For Viewing In 2018 New Series Typically Start By Producing A P 2 (21.81 KiB) Viewed 29 times
More than 500 scripted television series were available for viewing in 2018. New series typically start by producing a pilot episode that can be evaluated by a network before it agrees to pick up the series for production. Hale's TV Productions is considering producing a pilot for a comedy series in the hope of selling it to a major television network. The network may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, Hale may either produce the pilot and wait for the network's decision or transfer the rights for the pilot and series to a competitor for $100,000. Hale's decision alternatives and profits (in thousands of dollars) are as follows: State of Nature Decision Alternative Produce pilot, d Sell to competitor, d₂ P(F) = 0.69 P(U)= 0.31 P(s, 1F) = 0.08 P(s₂|F) = 0.28 P(s₂|F) = 0.64 P(s, IU) = 0.45 P(s₂U) = 0.39 P(s, 1U) = 0.16 Agency 1 Reject, 5₁ No Agency The probabilities for the states of nature are P(s) = 0.1947, P(5₂) = 0.3141, and P(s) = 0.4912. For a consulting fee of $5,000, an agency will review the plans for the comedy series and indicate the overall chances of a favorable network reaction to the series. Assume that the agency review will result in a favorable (F) or an unfavorable (U) review and that the following probabilities are relevant. 2 -100 100 F (a) Construct a decision tree for this problem. (Enter your answers in thousands of dollars.) Decision Tree Description 3 1 Year, 5₂ 2 Years, 53 4 5 50 100 d₂ 10 What is the expected value (in thousands of dollars)? thousand dollars 150 (11) 100 5₂ $₁ (b) What is the recommended decision if the agency opinion is not used? O produce pilot, d Ⓒsell to competitor, d₂
(c) What is the expected value of perfect information (in thousands of dollars)? thousand dollars (d) What is Hale's optimal decision strategy assuming the agency's information is used? If favorable, produce If unfavorable, sell . ' (e) What is the expected value (in thousands of dollars) of the agency's information? (Round your answer to two decimal places.) thousand dollars (f) Is the agency's information worth the $5,000 fee? O Yes No What is the maximum that Hale should be willing to pay (in thousands of dollars) for the information? (Round your answer to two decimal places.) thousand dollars
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