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States of Nature Rates Rates rise stable Rates fall Alternatives 0.4 0.35 0.25 1: 1-year VRM $63,500 $48,500 $42,500 2: 2 year VRM $59,000 $54,000
States of Nature Rates Rates rise stable Rates fall Alternatives 0.4 0.35 0.25 1: 1-year VRM $63,500 $48,500 $42,500 2: 2 year VRM $59,000 $54,000 $45,000 3:3-year VRM $59,500 $53,500 $49,500 3: 5-year Fixed $57,000 $57,000 $57,000 Suggest the best alternatives considering the following criteria | Alternative Value Equal probabilities Optimism Pessimism - conservative approach Criterion of Realism (Hurwicz) (alpha 0.4) Regret (Savage) Expected Value (EV) or Expected Monetary Value (EMV) Expected Opportunity Loss (EOL) or regret Using the formula, find out the value of perfect information. EV with PI
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