Question:

Assume you are the owner of TheBlues Inc., an international manufacturer of electronic products, and you are contemplating introducing a new type of Blue Ray player. After considering the potential market share for the product, your accountant estimated that after the first year of the new product on the market, TheBlues inc. may have a financial result ranging from a loss of AUD 280,000 to a profit of AUD 800,000. To take a decision in this situation, you need to assess your utility function over the expected financial outcomes.

you need to assess one of the quantiles of your utility function.

Last digit

2

Quantile index

0.25

Write in words the complete dialog to assess the uncertainty interval of the selected ?-quantile of utility, including:

Initial stage of the assessment process up till first indifference;

Elicitation of the lower bound of the ?-quantile of utility;

Elicitation of the upper bound of the ?-quantile of utility; and

Determination of the final uncertainty interval of the selected ?-quantile of

utility and its suggested point estimate.

9.5 To investigate the error distribution and influence, we would like to have bootstrapped estimates of the squared error. Suppose that a data set contains the response y and predictor x. Write a statistic function for use with the boot function that will return the MSE for the fitted simple linear regression model y = Bo + Bid + . Test this function by generating random bivariate normal data and running an ordinary bootstrap of the MSE for the regression model.4.49 Behboodian (1990) illustrates how to construct bivariate random variables that are uncorrelated but dependent. Suppose that f1, fa, 91, 92 are univariate densities with means /41, un, 1, Ca, respectively, and the bivariate random variable (X, Y) has density (X, Y) ~ afi(z)gi(y) + (1 - a)/=(x)ga(y). where 0