A firm has three investment alternatives. Pay offs are in thousands of dollars.
Economic ConditionsDecision Alternatives Up, s1 Stable, s2 Down, S3Investment A, d1 100 25 0Investment B, d2 75 50 25Investment C, d3 50 50 50Probabilities 0.40 0.30 0.30
Indifference Probability (p)Profit Decision Maker A Decision Maker B$75,000 0.80 0.60$50,000 0.60 0.30$25,000 0.30 0.15
d. What is the utility of a payoff of 75 for decision maker B? U(100) = 10 and U (0) = )e. What is the utility of a payoff of 50 for decision maker B?U(100) = 10 and U (0) = )f. What is the utility of a payoff of 25 for decision maker B? U(100) = 10 and U (0) = )
Already registered? Login
Not Account? Sign up
Enter your email address to reset your password
Back to Login? Click here