For the car rental decision in these Problems  suppose that the cost of a minor fender bender is normally distributed with a mean of $ 2000 and standard deviation of $ 100, and the cost of a major accident is triangular with a minimum of $ 10,000, maximum of $ 25,000, and most likely value of $ 16,000. Use Analytic Solver Platform to simulate the decision tree and find the distribution of the expected value of not taking the insurance.

Suppose that a car rental agency offers insurance for a week that costs $ 75. A minor fender bender will cost $ 2,000, whereas a major accident might cost $ 16,000 in repairs. Without the insurance, you would be personally liable for any damages. What should you do? Clearly, there are two decision alternatives: take the insurance, or do not take the insurance. The uncertain consequences, or events that might occur, are that you would not be involved in an accident, that you would be involved in a fender bender, or that you would be involved in a major accident. Develop a payoff table for this situation. What decision should you make using each strategy?

Assume that you researched insurance industry statistics and found out that the probability of a major accident is 0.05% and that the probability of a fender bender is 0.16%. What is the expected value decision? Would you choose this? Why or why not?

Suppose that a car rental agency offers insurance for a week that costs $ 75. A minor fender bender will cost $ 2,000, whereas a major accident might cost $ 16,000 in repairs. Without the insurance, you would be personally liable for any damages. What should you do? Clearly, there are two decision alternatives: take the insurance, or do not take the insurance. The uncertain consequences, or events that might occur, are that you would not be involved in an accident, that you would be involved in a fender bender, or that you would be involved in a major accident. Develop a payoff table for this situation. What decision should you make using each strategy?