Instruction 17-3
The following payoff matrix is given in dollars.
Suppose the probability of Event 1 is 0.5 and Event 2 is 0.5.
-Referring to Instruction 17-3,what is the action with the preferable coefficient of variation?
A)Action A.
B)Action B.
C)Either Action A or Action B.
D)It cannot be determined.

Question

Quizplus · Accepted Answer

The coefficient of variation for action B is 0.33, which is lower than the coefficient of variation for action A (0.75). Therefore, action B is the preferable choice based on the concept of risk aversion.

Instruction 17-3 The Following Payoff Matrix Is Given in Dollars