value of information is actually used to measure the expected return or expected utility from the available data and it can be computed that when a decision is altered what would be the change in the expected utility as per the presented data on the whole and thus reduces the level of uncertainty and increases the certainity level all in all
Therefore (c) the increase in expected utility from a changed decision based on information is the answer to this question
QUESTION 40 There are two states of the world. In state 1, you get $100. In...
QUESTION 40 There are two states of the world. In state 1, you get $100. In state 2, you get $50. Assuming rationality, and the expected return is $87.50, what is the probability state 1 occurs? 0.25 0.5 0.75 1
QUESTION 40 There are two states of the world. In state 1, you get $100. In state 2; you get $50. Assuming rationality, and the expected return is $87.50, what is the probability state 1 occurs? 0.25 0.5 0.75 1
QUESTION 41 What is the value of information in a world of uncertainty? The decrease in the certainty equivalent The gain in profit from selling more units The increase in expected utility from a changed decision based on information The option price minus the option value
QUESTION 41 What is the value of information in a world of uncertainty? The decrease in the certainty equivalent The gain in profit from selling more units The increase in expected utility from a changed decision based on information The option price minus the option value . Click Save and Submit to save and submit. Click Save All Answers to save all a
can you check the answers for these 4 questions please. and if any wrong. can you please tell which one is the right option. Marginal cost can be expressed as the ratio of the price of labor and the marginal product of labor I only when labor is held constant e only when labor is the only variable input whether labor is held constant or not if all factors are variable QUESTION 29 The demand curve facing a perfectly competitive...
2. (Options) Consider a world with two stocks (S, and S) and two possible states. The stocks can be purchased in period t. In the first state, which happens with probability 0.5 the stocks can be sold in t + 1 for 20 and 10 dollars respectively. In state 2, the stocks can be sold in t+1 for 5 and 25 respectively. i) What combination of assets will secure a selling price int+ 1 for the portfolio of 15? ii)...
(Mathematical Question) Suppose you have a utility function where W is the level of wealth you end up with. You are currently in possession of 81 dollars. There is a 1/3 chance that a miserable event will happen and cost you all 81 dollars. Assume your preference over uncertainty is characterized by the expected utility. a. (5pts) Define the gamble b. (5pts) What is the expected value of this gamble? c. (10pts) Find the certainty equivalent of the gamble. Then find the insurance premium...
Part IV. Decision Theory (40 points) Consider buying a house whose market value is $500K, but you can get it for $450K. However, there is a risk: if the house has structural problems (its current condition is not OK), you will have to spend $110K to fix it. The probability that currently it's in OK condition is estimated to be 75%; that is, P(OK) : 0.75. 1) (4 points) What is the expected utility (i.e., expected net gain or loss...
utility function Question #A4/04 [20 marks] Mr. E. Kisan is eager to make his utility function explicit. So he approaches his financial consultant, Mr. Chelumala Rishi ReYanth for help who places before Mr. Kisan a choice of a or Rs. 100 (say W2) with probabilities p and (1-p) lottery giving either Rs. 10 (say Wi) respectively. As the value of p is changed Mr. E. Kisan, makes a decision and is able to decide on each corresponding values of C...