Question

matrix . Betzsy Pitz ccording Bayes' decisions rule. For their next nvestment they need to decide between two 400100 ossible alternatives. The table shows the payoffs and ssociated probabilities for each state of nature that Prior Probabilities 04 an result from these investments ) [5%) Based on this information, which decision alternative should be chosen? er company makes investment decisions Altermative States of Nature 0 100 0.6 b) [10%] What is the maximum amount of money that the company should be willing to pay for additional information to help make an informed decision.? c) [10%) Pitzer has the option of hiring a consultant for S100, to help forecast which state of nature will occur. The consultant will accurately forecast the state of nature ei 60% of the time. For 02, the consultant will accurately forecast it 80% of the time. Determine the optimal strategy

Answer 1

09 10 max)e make an med decision s mas

August '09 Day 227-138 a.o 80ム100-