Suppose David, a farmer is currently growing barley. He is considering whether he will plant a new type of vegetable (soybean) to expand his farming business next year. There are three alternatives he can choose: (1) add a new type of vegetable for his farmland portfolio, (2) increase production of only barley or (3) do nothing. The weather report shows that there is a 10% chance that most of the next year will be rainy, 50% chance that half of the next year is rainy, and 40% chance that most of the next year is sunny. Peter, the firm's capital appreciations analyst, estimate the following annual returns for these alternatives: Rainy - Most of the Rainy - half of the Sunny most of the next year next year next year Add a new type of $110,000 $65,000 $55,000 vegetable for his farmland portfolio Increase production $90,000 $78,000 $70,000 of only barley Do nothing $5000 $4000 $1500 a. Use the maxi-max and max-min criterion to determine which alternative should be chosen b. Use a decision tree analysis to analyze these decision alternatives. c. Which option should be chosen in this case? d. Later, David discovered that current prior probabilities might be inaccurate, so it hired a famous economic analyst, James, to come up with different prior probabilities for weather status. Two months later, James came up with different probabilities. He estimates a 10 percent probability of Rainy - Most of the next year, a 25 percent probability of Rainy-half of the next year, and a 65 percent probability of Sunny- most of the next year. Based on the new probabilities, which option should be chosen with new probabilities? Suppose David, a farmer is currently growing barley. He is considering whether he will plant a new type of vegetable (soybean) to expand his farming business next year. There are three alternatives he can choose: (1) add a new type of vegetable for his farmland portfolio, (2) increase production of only barley or (3) do nothing. The weather report shows that there is a 10% chance that most of the next year will be rainy, 50% chance that half of the next year is rainy, and 40% chance that most of the next year is sunny. Peter, the firm's capital appreciations analyst, estimate the following annual returns for these alternatives: Rainy - Most of the Rainy - half of the Sunny most of the next year next year next year Add a new type of $110,000 $65,000 $55,000 vegetable for his farmland portfolio Increase production $90,000 $78,000 $70,000 of only barley Do nothing $5000 $4000 $1500 a. Use the maxi-max and max-min criterion to determine which alternative should be chosen b. Use a decision tree analysis to analyze these decision alternatives. c. Which option should be chosen in this case? d. Later, David discovered that current prior probabilities might be inaccurate, so it hired a famous economic analyst, James, to come up with different prior probabilities for weather status. Two months later, James came up with different probabilities. He estimates a 10 percent probability of Rainy - Most of the next year, a 25 percent probability of Rainy-half of the next year, and a 65 percent probability of Sunny- most of the next year. Based on the new probabilities, which option should be chosen with new probabilities