Question
The following payoff table shows profits based on the decision (DA or DB) and the future unknown states of nature (S1 and S2). Given the
The following payoff table shows profits based on the decision (DA or DB) and the future unknown states of nature (S1 and S2). Given the probabilities of these future states, what is the expected value of perfect information (EVPI)?
| Future State S1 Probability = 0.8 | Future State S2 Probability = 0.2 | |
Decision DA | $400 | $400 |
Decision DB | $200 | $800 |
options:
| a | $400 |
| b | $320 |
| c | $240 |
| d | $160 |
| e | $80 |
| f | $0 |
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Elementary Linear Algebra with Applications
Authors: Howard Anton, Chris Rorres
9th edition
471669598, 978-0471669593
