Christaker is considering transitioning to a new job next year. He will either keep his current job which pays a net income of $71,000 or switch to a new job. If he changes jobs, his net income will vary depending on the state of the economy. He estimates that the economy will be Strong with 40% chance ($95,000 net income), Average with 20% chance ($70,000 net income), or Weak with 40% chance ($59,000 net income).

Part A 1. What is the best expected value for Christaker and the corresponding decision using the Expected Monetary Value approach? ________$

1. Change job b) keep current job

2. What is the expected value of perfect information (EVPI)? __________$

Part B Christaker can hire Sandeep, a mathematical economist, to provide information regarding the state of the economy next year. Sandeep will either predict a Good or Bad economy, with probabilities 0.5 and 0.5 respectively. If Sandeep predicts a Good economy, there is a 0.54 chance of a Strong economy, and a 0.4 chance of an Average economy. If Sandeep's prediction is Bad, then the economy has a 0.54 chance of being Weak and 0.36 chance of being Average.

1. If Sandeep predicts Good economy, what is the expected value of the optimal decision? _________$

2. If Sandeep predicts Bad economy, what is the expected value of the optimal decision? _______$

3. What is the expected value with the sample information (EVwSI) provided by Sandeep? _______$

4. What is the expected value of the sample information (EVSI) provided by Sandeep? ________$

5. If the cost of hiring Sandeep is $450, what is the best course of action for Christaker? (TICK OR WRITE OR HIGHLIGHT THE CORRECT OPTION)

1. Hire Sandeep; cost is greater than EVSI
2. Hire Sandeep; cost is less than EVSI
3. Don't hire Sandeep; cost is greater than EVSI
4. Don't hire Sandeep; cost is less than EVSI

6. What is the efficiency of the sample information? Round % to 1 decimal place. _____________$