Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I need to make a decision tree with this information Play now? Play later? You can become a millionaire! That's what the junk mail said.
I need to make a decision tree with this information
Play now? Play later? You can become a millionaire! That's what the junk mail said. But then there was the fine print If you act before midnight tonight, then here are you chances: 0.15% that you receive $1,000,000; 50% that you get nothing, otherwise you must PAY $5000. But wait, there's more! If you don't win the million AND you don't have to pay on your first attempt then you can choose to play one more time. If you do, then we 20X your probability of winning big-yes, you will hava a 3% chance of receiving $150,000 and 50% chance of winning $5000, but must pay $10,000 otherwise. What is your expected outcome for attempting this venture? Solve this problem using a decision tree and clearly show all calculations and the expected value at each node. Answer these questions: 1) should you play at all? (596) And if so, what is my expected (net) monitary value? (10%) 2) If you play and don't win at all on the first try (but don't lose money), should you try again? (5%) why? (5%) 3) clearly show the decision tree (40%) and expected net monitary value at each node (25%) Play now? Play later? You can become a millionaire! That's what the junk mail said. But then there was the fine print If you act before midnight tonight, then here are you chances: 0.15% that you receive $1,000,000; 50% that you get nothing, otherwise you must PAY $5000. But wait, there's more! If you don't win the million AND you don't have to pay on your first attempt then you can choose to play one more time. If you do, then we 20X your probability of winning big-yes, you will hava a 3% chance of receiving $150,000 and 50% chance of winning $5000, but must pay $10,000 otherwise. What is your expected outcome for attempting this venture? Solve this problem using a decision tree and clearly show all calculations and the expected value at each node. Answer these questions: 1) should you play at all? (596) And if so, what is my expected (net) monitary value? (10%) 2) If you play and don't win at all on the first try (but don't lose money), should you try again? (5%) why? (5%) 3) clearly show the decision tree (40%) and expected net monitary value at each node (25%)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started