Which team to bet on without further information, Microeconomics

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Which team to bet on without further information

Before the 2014 World Series, you bet on which team will win. Suppose the National League (NL) team will win with probability 0.6 and the American League (AL) team will win with probability 0.4. Your net payoff contingent on which team you bet on and which one actually wins is:

Your action
Bet on NL Team Bet on AL Team
Outcome NL team wins 100 -25
(prob. = 0.6)
AL team wins -25 100
(prob. = 0.4)

a. Which team will you bet on without further information? What is your expected payoff?
b. Suppose your friend could predict the outcome of this World Series with 100% accuracy. What would be the value of your friend's "tip" to you?
c. If your friend could only predict the outcome with 75% accuracy, how much would his "tip" be worth to you?

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Microeconomics: Which team to bet on without further information

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Microeconomics: Which team to bet on without further information

Reference No:- TGS039715

Have a Question? (oR Write a Review)

Recent Questions Asked Microeconomics

Q : What to conclude about risk attitude

Q : What selling price per unit will company require

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Q : What amount of joel''s wages that will be charged

Q : Which team to bet on without further information

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Request for Solution File

Ask an Expert for Answer!!

Microeconomics: Which team to bet on without further information

Reference No:- TGS039715

Recent Questions Asked Microeconomics

Q : What to conclude about risk attitude

Q : What selling price per unit will company require

Q : Alpha of the passive investors

Q : What amount of joel''s wages that will be charged

Q : Which team to bet on without further information

Q : Allocated cost of the sold items and ending inventory

Q : Determining the dollar amount of net income

Q : What weekly payroll would be

Q : At what level should the daily quota be set

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