Supposed a proposed public policy could result in three possible outcomes:
1. Present value of net benefits of $4,000,000;
2. Present value of net benefits of $1,000,000;
3. Present value of net benefits of -$10,000,000 (yes, it is a loss).
If the probability of each outcome is, respectively, 0.85, 0.10, and 0.05, should the policy be pursued or not? Explain.