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The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature. Decision Alternative States of Nature

The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature.

Decision Alternative States of Nature

s1

s2

s3

d1

270 120 45

d2

120 120 95

Suppose that the decision maker obtained the probabilities

P(s1) = 0.65, P(s2) = 0.15,

and

P(s3) = 0.20.

Use the expected value approach to determine the optimal decision.

EV(d1)=

EV(d2)=

The optimal decision is ? d d .

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