Question

Three decision makers have assessed payoffs for the following decision problem (payoff in dollars).

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Decision Alternative	State of Nature
	s1	s2	s3
d1	15	40	–20
d2	60	80	–80

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The indifference probabilities are as follows:

		Indifference Probability (p)
Payoff	Decision Maker A	Decision Maker B	Decision Maker C
80	Does not apply	Does not apply	Does not apply
60	0.7	0.95	0.85
40	0.5	0.9	0.7
15	0.3	0.8	0.55
–20	0.15	0.6	0.35
–80	Does not apply	Does not apply	Does not apply

For each of the cases, assume that the utilities for best and worst payoffs are 10 and 0, respectively.

If P(s₁) = 0.3, P(s₂) = 0.5, and P(s₃) = 0.2, find a recommended decision for Decision Maker A. What is the expected value of this decision? Round you answer to two decimal places?  

Answer 1

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