The following table provides information about the profit payoff of an investment strategy.

$$\begin{array} { c c c c c }
\text { Decision } &&{ \text { State of Nature } } \
\hline \text { Alternative } & \boldsymbol { s l } & \boldsymbol { s 2 } & \boldsymbol { s 3 } & \mathbf { s 4 } \
\hline d 1 & 52 & 44 & 44 & 36 \
d 2 & 52 & 68 & 60 & 40 \
d 3 & 36 & 36 & 36 & 44 \
\hline \text { Probability } & 0.3 & 0.2 & 0.4 & 0.1 \
\hline
\end{array}$$
a. What is the optimal decision strategy if perfect information were available?
b. What is the expected value for the decision strategy developed in part a?
c. Using the expected value approach, what is the recommended decision without perfect information? What is its expected value?
d. What is the expected value of perfect information?

Question

The following table provides information about the profit payoff of an investment strategy.
​
​ $$\begin{array} { c c c c c } 
\text { Decision } &&{ \text { State of Nature } } \
\hline  \text { Alternative } & \boldsymbol { s l } & \boldsymbol { s 2 } & \boldsymbol { s 3 } & \mathbf { s 4 } \
\hline d 1 & 52 & 44 & 44 & 36 \
d 2 & 52 & 68 & 60 & 40 \
d 3 & 36 & 36 & 36 & 44 \
\hline \text { Probability } & 0.3 & 0.2 & 0.4 & 0.1 \
\hline
\end{array}$$ ​ 
a. What is the optimal decision strategy if perfect information were available?
b. What is the expected value for the decision strategy developed in part a?
c. Using the expected value approach, what is the recommended decision without perfect information? What is its expected value?
d. What is the expected value of perfect information?

Quizplus · Accepted Answer

The Answer of The following table provides information about the profit payoff of an investment strategy.
​
​ $$\begin{array} { c c c c c } 
\text { Decision } &&{ \text { State of Nature } } \
\hline  \text { Alternative } & \boldsymbol { s l } & \boldsymbol { s 2 } & \boldsymbol { s 3 } & \mathbf { s 4 } \
\hline d 1 & 52 & 44 & 44 & 36 \
d 2 & 52 & 68 & 60 & 40 \
d 3 & 36 & 36 & 36 & 44 \
\hline \text { Probability } & 0.3 & 0.2 & 0.4 & 0.1 \
\hline
\end{array}$$ ​ 
a. What is the optimal decision strategy if perfect information were available?
b. What is the expected value for the decision strategy developed in part a?
c. Using the expected value approach, what is the recommended decision without perfect information? What is its expected value?
d. What is the expected value of perfect information?

The Following Table Provides Information About the Profit Payoff of an Investment