Question 3: Dr. McFadden, a surgeon, must decide what mode of treatment to use on Mr. Samuels. There are three modes of treatment: Mode A, B, and C; and three possible states of nature: 1. Treatment...

Extracted text: Question 3: Dr. McFadden, a surgeon, must decide what mode of treatment to use on Mr. Samuels. There are three modes of treatment: Mode A, B, and C; and three possible states of nature: 1. Treatment succeeds, and the patient leads a normal life, 2. The patient survives treatment but is permanently disabled, and 3. The patient fails to survive treatment. The probability that the patient leads a normal life is 0.4, Disability is 0.4 and Non- survival is 0.2. Dr. McFadden has prepared the decision table below. What mode of treatment maximizes the expected value? Treatment Mode Outcome Normal Life $1,000,000 $3,000,000 $4,000,000 0.4 Disability -$2,000,000 -$2,500,000 -$3,000,000 Non-Survival -$500,000 -$500,000 -$600,000 0.2 A P(outcome) 0.4