Brown’s TV Production is considering producing a pilot for a comedy series for a major network. While the network may reject the pilot and series, it may also purchase the program for 1 or 2 years....


Brown’s TV Production is considering producing a pilot for a comedy series for a major network.  While the network may reject the pilot and series, it may also purchase the program for 1 or 2 years.  Brown may produce the pilot or transfer the rights for the series to a competitor for $100,000.  Brown’s profits are summarized in the following payoff table (profits in thousands).





























sate of nature
reject1 year2 years
produce pilot-10050150
sell to competitor100100100



  1. If the probability estimates for the states of nature are, P(reject)=0.20, P(1 year)=0.30, and P(2 years)=0.5, what is the maximum Brown should be willing to pay for inside information on what the network will do?




Jun 09, 2022
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