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gonzaloc
gonzaloc
08.08.2019 • 
Mathematics

states of nature
decision poor average good
alternatives economy economy economy
nautical cottage, d1 5 3.5 -1.5
shoreline cottage, d2 3 -1.5 2.5
seaside cottage, d3 -1.5 4.5 6
? suppose the probabilities for poor, average, and good economy are 40%, 25%, and 35% respectively,
c. construct a decision tree (draw it neatly by using ms word/ms excel drawing tool or if you are drawing it by hand, a ruler) and solve it using expected value approach. what is the recommended decision alternative?
d. calculate the expected value of the perfect information (evpi)?

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