What is the optimal decision


Problem:

In the following profit payoff table for a decision problem with two states of nature and three decision alternatives, the probabilities for s1 and s2 are: p(s1)=0.8 and p (s2)= 0.2

S=State of Nature
D=Decision alternatives

       S1 S2
d1    15 10
d2    10 12
d3     8  20

a. What is the optimal decision?

b. Find the EVPI (expected value of perfect information)

Solution Preview :

Prepared by a verified Expert
Accounting Basics: What is the optimal decision
Reference No:- TGS01933735

Now Priced at $25 (50% Discount)

Recommended (93%)

Rated (4.5/5)