What is the maximum price the electronics product manufacturer should be willing to pay for perfect information
Question:
What is the maximum price the electronics product manufacturer should be willing to pay for perfect information regarding the market share in Exercise 22.16?
In exercise 22.16
An international manufacturer of electronic products is contemplating introducing a new type of compact disk player. After some analysis of the market, the president of the company concludes that, within 2 years, the new product will have a market share of 5%, 10%, or 15%. She assesses the probabilities of these events as .15, .45, and .40, respectively. The vice-president of finance informs her that, if the product captures only a 5% market share, the company will lose $28 million. A 10% market share will produce a $2 million profit, and a 15% market share will produce an $8 million profit.
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