Question
Laplace. With two events, we assign each a probability of 0.5. Thus, the weighted payoffs ($000) are Alternative Weighted Payoff Small facility 0.5 times 200
Laplace. With two events, we assign each a probability of 0.5. Thus, the weighted payoffs ($000) are Alternative Weighted Payoff Small facility 0.5 times 200 + 0.5 times 270 = 235 Large facility 0.5 times 160 + 0.5 times 800 = 480 The best of these weighted payoffs is $480,000, so the realist would build a large facility.
How did they get $480,000?
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Strategic Management
Authors: John Pearce, Richard Robinson
14th edition
77862511, 978-0077862510
