Solved

A Payoff Table, the Prior Probabilities for Two States of Nature

Question 49

Essay

A payoff table, the prior probabilities for two states of nature, and the likelihood probabilities are shown below.
Payoff Table:  Alternative  State of Nature a1a2a3s1s20.950.05330.080.9225\begin{array}{ll}&\text { Alternative }\\\text { State of Nature }&\quad a_1\quad\quad a_2\quad\quad a_3\\\begin{array}{ll}s_1\\s_2\end{array}&\begin{array}{|lll|}\hline 0.95 & 0.05&33 \\0.08 & 0.92 &25\\\hline\end{array}\end{array}
Prior Probabilities:
P( s1s _ { 1 } ) = 0.4, P( S2S _ { 2 } ) = 0.6.
Likelihood Probabilities: I1I2s1s20.950.050.080.92\begin{array}{ll}&\quad I_1\quad\quad I_2\\\begin{array}{ll}s_1\\s_2\end{array}&\begin{array}{|ll|}\hline 0.95 & 0.05 \\0.08 & 0.92 \\\hline\end{array}\end{array}
A) Use the prior and likelihood probabilities to calculate the posterior probabilities for the experimental outcome I1I _ { 1 } .
B) Use the posterior probabilities from a. to recalculate the expected monetary value of each act, then determine the optimal act and the EMV*.
C) Use the prior and likelihood probabilities to calculate the posterior probabilities for the experimental outcome I2I _ { 2 } .
D) Use the posterior probabilities from c. to recalculate the expected monetary value of each act, then determine the optimal act and the  EMV \text { EMV } ^ { * } .
E) Use your answers to parts a. to d. to calculate the expected monetary value with additional information.
F) Calculate the expected value of sample information.

Correct Answer:

verifed

Verified

a. ). Thus
EMV´= (0.428)(32....

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents