Problem
A firm has three investment alternatives. Payoffs are in thousands of dollars.
Indifference PROBABILITY (p)
|
Profit
|
Decision Maker A
|
Decision Maker B
|
|
$80,000
|
0.9
|
0.6
|
|
$60,000
|
0.7
|
0.3
|
|
$40,000
|
0.4
|
0.2
|
|
$20,000
|
0.1
|
0.1
|
Task
What is the utility of a payoff of $80,000 for decision maker A?
What is the utility of a payoff of $20,000 for decision maker A?
What is the utility of a payoff of $60,000 for decision maker B?
What is the utility of a payoff of $40,000 for decision maker B?