Question
We are thinking of filming the Don Harnett story. We know that if the film is a flop, we will lose $4 million, and if
We are thinking of filming the Don Harnett story. We know that if the film is a flop, we will lose $4 million, and if the fin is a success, we will earn $15 million. Beforehand we believe that there is a 10% chance that the Don Harnett story will be a ht. Before filming, we have the option of paying the noted movie critic Roger Alert $1 million for his view of the film. In the past, 60% of all actual hits to be hits and 90% of at actual flops to be flops. We want to maximize our expected profits. Use a decision tree to determine our best strategy. What is EVSI? What is EVPI?
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