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Mary is planning to invest in one of the following: Horticulture (H), Forestry (F) and Piggery (P) under good economic conditions (GEC), poor economic conditions
Mary is planning to invest in one of the following: Horticulture (H), Forestry (F) and Piggery (P) under good economic conditions (GEC), poor economic conditions (PEC) and stable economic conditions (SEC). The payoff table is shown below. GEC PEC SEC Horticulture (H) 600 1000 700 Forestry (F) 400 400 1200 Piggery (P) 900 650 500 Probability 0.2 0.3 0.5 Required a. Represent the information in the payoff table using a decision tree. (6 marks) b. Evaluate the nodes and determine which decision to determine what alternative you will choose. (5 marks) c. Produce an Expected Opportunity Loss (EOL) Table. (5 marks) d. Using the probabilities given and the EOL values in (c), show that the decision alternative you chose in (b) is the same. (4 marks)
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