A firm has three investment alternatives. Payoffs are in thousands of dollars.

Economic Conditions
Decision Alternative	Ups1	Stables2	Downs3
Investment A,d1	100	25	0
Investment B,d2	75	50	25
Investment C,d3	50	50	50
Probabilities	0.40	0.30	0.30

(a)

Using the expected value approach, which decision is preferred?

- Select your answer -d1d2d3Item 1

(b)

For the lottery having a payoff of $100,000 with probabilitypand $0 with probability (1 -p), two decision makers expressed the following indifference probabilities. Find the most preferred decision for each decision maker using the expected utility approach.

Indifference Probability (p)
Profit	Decision Maker A	Decision Maker B
$75,000	0.80	0.60
$50,000	0.60	0.30
$25,000	0.30	0.15

Decision Maker A:- Select your answer -d1d2d3Item 2

Decision Maker B:- Select your answer -d1d2d3Item 3

(c)

Why don't decision makers A and B select the same decision alternative?

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