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Recall the Kim Brown investment example in Lecture 5, which has this payoff table: States of Nature Small rise Decision Gold Bond Stock C/D

 

Recall the Kim Brown investment example in Lecture 5, which has this payoff table: States of Nature Small rise Decision Gold Bond Stock C/D Large rise -100 250 500 60 100 200 250 60 No change Small fall 300 -100 -200 60 200 150 100 60 Large fall 0 -150 -600 60 Find the best choice for the following types of decision makers: a) For a very pessimistic decision maker. b) For a decision maker who is neither optimistic nor pessimistic. c) For a slightly optimistic decision maker with a = 0.6. For each approach, show the payoff table, including the criterion, and show how you calculated the best alternative.

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