Katie follows the five Rules of Actional Thought and prefers more money to less. She faces one decision with three alternatives. A, B, and C and one uncertainty with degrees /q and i\. In other words,...

Katie follows the five Rules of Actional Thought and prefers more money to less. She faces one decision with three alternatives. A, B, and C and one uncertainty with degrees /q and i\. In other words, the alternative she chooses and the degree ofthe uncertainty she later observes fully describes her prospects. This plot details her «-value for each ofthe three alternatives as a function of her probability that degree /j will occur:

Katie can perform a test that could give her more information on I. Her beliefs are { "/|"| /|, & } = p, and {'V|/o,&} = qHow many of the following statements must be true?

I. If p = 0.5 and q = 0.9, the test is both relevant and material.

II. \f p = 0.5 and q = 0.9, Katie should choose Alternative B if the test says "ii" and Alternative C if the test says "/q".

III. Ifthe test is symmetric and if p S: 0.5, the minimum accuracy p that will make the test material for

Katie is approximately 79% (rounding to the nearest percent).

a. 0 c. 2

b. I d. 3