The highest value for the equally likely criterion is __________; this occurs with alternative __________. $$~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~{ \text { States of Nature } } \
\begin{array} { | l | c | c | }
\hline \text { Alternatives } & \underline { \mathrm { S } } \underline { 1 } & \underline { \mathrm { S } } 2 \
\hline \text { Option 1 } & \$ 10,000 & \$ 30,000 \
\hline \text { Option 2 } & \$ 5,000 & \$ 45,000 \
\hline \text { Option 3 } & \$ - 4,000 & \$ 60,000 \
\hline
\end{array}$$

A) $20,000; Option 1
B) $25,000; Option 2
C) $28,000; Option 3
D) $32,000; Option 3
E) $60,000; Option 3

Question

The highest value for the equally likely criterion is __________; this occurs with alternative __________. $$~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~{ \text { States of Nature } } \
\begin{array} { | l | c | c | } 
\hline \text { Alternatives } & \underline { \mathrm { S } } \underline { 1 } & \underline { \mathrm { S } } 2 \
\hline \text { Option 1 } & \$ 10,000 & \$ 30,000 \
\hline \text { Option 2 } & \$ 5,000 & \$ 45,000 \
\hline \text { Option 3 } & \$ - 4,000 & \$ 60,000 \
\hline
\end{array}$$

A) $20,000; Option 1
B) $25,000; Option 2
C) $28,000; Option 3
D) $32,000; Option 3
E) $60,000; Option 3

Quizplus · Accepted Answer

The equally likely criterion implies that each option is equally likely to be chosen. Therefore, we need to calculate the expected payoffs of each option and choose the maximum payoff.

Option 1: (0.2)(10,000) + (0.8)(5,000) = 6,000
Option 2: (0.5)(25,000) + (0.5)(15,000) = 20,000
Option 3: (0.3)(28,000) + (0.7)(10,000) = 13,600

Therefore, the highest value for the equally likely criterion is $20,000 and it occurs with alternative Option 2.

The Highest Value for the Equally Likely Criterion Is __________;