Spotify Technology S.A. ($SPOT) is a music streaming company recently transitioned into a public company through a direct listing. Their stock opening price on the first day of trading was $165.90, and at market close of the first day it had dropped down to $149.60. A few weeks ago the company released its first quarterly earnings report, and the results werent very positive. Analysts expected the company to have earnings of (-$0.33)/share, and Spotify reported (-$1.01)/share, representing a

(-206.06%) surprise (Source: Nasdaq.com). Considering their poor start, company executives have rolled out several new subscription plans to replace the old ones in order to increase revenue and satisfy shareholders. Since you do not know with certainty the number of songs you will be adding to your library each month, you decide to construct a payoff table of decisions for several states of nature for your total annual costs. This will help you choose a new subscription. Round the calculations for the payoffs to the nearest cent ($0.01).

Scenarios	Monthly cost of subscription	Cost per new Song added to your library	Student Discount (applied to both the subscription and cost per added song)
Base	$2.50	$0.50	10%
Plus	$5.00	$0.20	20%
Premium	$10.00	$0.05	30%

Complete The Payoff Table

Scenario	3 songs added per month	5 songs added per month	15 songs added per month	25 songs added per month
Base
Plus
Premium

Hint: Be careful of the different units of time stated in the problem. Remember each scenario is to be calculated for a total yearly cost. Hint: In a payoff table, revenues are positive and costs are negative.

Decision Rules Using the Given Payoff Table

The below provided payoff table differs from the payoff table you calculated above. Use the below table to answer the following questions. The top row of the below table holds the values associated with the probabilities of the states of nature.

	Payoff Table (given)
	Songs added per month
Scenario	3	5	15	25
Base	($45.00)	($50.00)	($60.00)	($120.00)
Plus	($55.00)	($65.00)	($75.00)	($90.00)
Premium	($75.00)	($80.00)	($85.00)	($89.00)
P(x)	0.1	0.2	0.4	0.3

Build A Regret Table

Use the values in the GIVEN payoff table to construct a regret table and answer the following questions. Hint: In a regret table, all regrets are positive.

	Regret Table
	Songs added per month
Scenario	3	5	15	25
Base
Plus
Premium
P(x)	0.1	0.2	0.4	0.3

Answer the following questions:	Decsion	Value
Which option should be used according to the MAXIMAX decision rule?
Which option should be used according to the MAXIMIN decision rule?
Which option should be used to maximize the EMV if there is an equally-likely criterion?
Which option should be used to maximize the EMV using the table probabilities?
Which option should be used according to the MINIMAX REGRET decision rule?
Which option should be used to minimize the EOL if there is an equally-likely criteria?
Which option should be used to minimize the EOL using the table probabilities?