Luxury vs mainstream which can be either booming (B), stagnating (S), or deteriorating (D). The payoffs associated
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Luxury vs mainstream
which can be either booming (B), stagnating (S), or deteriorating (D).
- The payoffs associated with a booming, stagnating, and deteriorating macroeconomic environment are $600, $200, and $100, respectively.
- The car company evaluates the probabilities of a booming, stagnating, and deteriorating economy at p(B)=0.3, p(S)=0.5, and p(D)=0.2.
- If the company decides to go with its current image, its payoff is $350, regardless of the macroeconomic environment.
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