Metropolitan Cablevision has the choice of using one of three DVR systems.Profits are believed to be a function of customer acceptance.The payoff to Metropolitan for the three systems is as follows:

The probabilities of customer acceptance for each system are as follows:

The first vice president believes that the indifference probabilities for Metropolitan should be as follows:

The second vice president believes Metropolitan should assign the following utility values:

a.Which vice president is a risk taker? Which one is risk averse?
b.Which system will each vice president recommend?
c.Which system would a risk-neutral vice president recommend?

Question

Metropolitan Cablevision has the choice of using one of three DVR systems.Profits are believed to be a function of customer acceptance.The payoff to Metropolitan for the three systems is as follows:
​  ​
The probabilities of customer acceptance for each system are as follows:
​  ​
The first vice president believes that the indifference probabilities for Metropolitan should be as follows:
​  ​
The second vice president believes Metropolitan should assign the following utility values:
​  ​ 
a.Which vice president is a risk taker? Which one is risk averse?
b.Which system will each vice president recommend?
c.Which system would a risk-neutral vice president recommend?

Quizplus · Accepted Answer

The Answer of Metropolitan Cablevision has the choice of using one of three DVR systems.Profits are believed to be a function of customer acceptance.The payoff to Metropolitan for the three systems is as follows:
​  ​
The probabilities of customer acceptance for each system are as follows:
​  ​
The first vice president believes that the indifference probabilities for Metropolitan should be as follows:
​  ​
The second vice president believes Metropolitan should assign the following utility values:
​  ​ 
a.Which vice president is a risk taker? Which one is risk averse?
b.Which system will each vice president recommend?
c.Which system would a risk-neutral vice president recommend?

Metropolitan Cablevision Has the Choice of Using One of Three