Question
2. You are a realtor considering listing a $500,000 house. The cost of advertising and providing food for other realtors during open showings is anticipated
2. You are a realtor considering listing a $500,000 house. The cost of advertising and providing food for other realtors during open showings is anticipated to cost you $5000. The house is quite unusual, and you are given a four-month listing. If the house is unsold after four months, you lose the listing and receive nothing. You anticipate that the probability you sell your own listed house is 0.3, the probability that another agent sells your listing is 0.2, and the probability that the house is unsold after 4 months is 0.5. If you sell your own listed house, the commission is a hefty $30,000. If another realtor sells your listing, the commission is $15,000. The bottom line: You will not take the listing unless you anticipate earning at least $6000. Should you list the house?
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