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Solve with steps please dont use excel Problem #4: 5.11. Reconsider Hugh Liedtke's decision as diagrammed in Figure 4.2. Note that three strategies are possible:
Solve with steps please dont use excel
Problem #4: 5.11. Reconsider Hugh Liedtke's decision as diagrammed in Figure 4.2. Note that three strategies are possible: (1) accept $2 billion, (2) counteroffer $5 billion and then accept $3 billion if Texaco counteroffers, and (3) coun- teroffer $5 billion and then refuse $3 billion if Texaco counteroffers. Suppose that Liedtke is unsure about the probabilities associated with the final court outcome. Let p = P(10.3 Billion) and q = P(5 Billion) so that 1 p - q = P(0 Billion). Create a two-way sensitivity graph that shows optimal strategies for Liedtke for possible values of p and q. (Hint: What is the constraint on p + q?) If Liedtke thinks that p must be at least 0.15 and q must be more than 0.35, can he make a decision without further probability assessment? Hint: The are three strategies: Strategy A = Accept $2 billion. Strategy B = Counteroffer $5 billion, then refuse if Texaco offers $3 billion. Strategy C = Counteroffer $5 billion, then accept if Texaco offers $3 billion.Tornado ramsStep by Step Solution
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