Nature gives company A one of three endowments; then company A picks one of two options.Depending on A's choice,company B picks one of three options with each one having two possible payoffs,decided by nature.How many chance forks does the decision tree depicting this have?
A) 4.
B) 9.
C) 19.
D) 28.
E) 36.

Question

Quizplus · Accepted Answer

The decision tree has 3 branches for company A's endowments, 2 branches for company A's options, 3 branches for company B's options, and 2 branches for nature's payoffs. So, the total number of chance forks is 3 * 2 * 3 * 2 = 36.

Nature Gives Company a One of Three Endowments; Then Company