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Example 21.6 The following payoff table gives the most accurate estimates of payoffs for three alterma- tive courses of action and four possible states of nature under conditions of uncertainty. A Payoff Table (Rs lakh) Courses of States of Nature Action S, S2 S3 125 100 70 20 A2 Ag 70 150 90 100 50 120 60 -10 The probabilities are-S,: 0.4, S, : 0.25, S; : 0.2 and S,: 0.15. Two questions arise: 1. What course of action would be recommended in this situation? 2. What is expected value of perfect information?

Example 21.6 The following payoff table gives the most accurate estimates of payoffs for three alterma- tive courses of action and four possible states of nature under conditions of uncertainty. A Payoff Table (Rs lakh) Courses of States of Nature Action S, S2 S3 125 100 70 20 A2 Ag 70 150 90 100 50 120 60 -10 The probabilities are-S,: 0.4, S, : 0.25, S; : 0.2 and S,: 0.15. Two questions arise: 1. What course of action would be recommended in this situation? 2. What is expected value of perfect information?

Calculus For The Life Sciences
Calculus For The Life Sciences
2nd Edition
ISBN:9780321964038
Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Publisher:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Chapter12: Probability
Section12.CR: Chapter 12 Review
Problem 16CR
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Example 21.6 The following payoff table gives the most accurate estimates of payoffs for three alterna- tive courses of action and four possible states of nature under conditions of uncertainty. A Payoff Table (Rs lakh) Courses of States of Nature Action S, S2 S3 S4 125 100 70 20 Ag Az Ag 70 90 100 50 150 120 60 -10 The probabilities are-S, :0.4, S2 : 0.25, S3:0.2 and S. : 0,15. Two questions arise: 1. What course of action would be recommended in this situation? 2. What is expected value of perfect information?
Transcribed Image Text:Example 21.6 The following payoff table gives the most accurate estimates of payoffs for three alterna- tive courses of action and four possible states of nature under conditions of uncertainty. A Payoff Table (Rs lakh) Courses of States of Nature Action S, S2 S3 S4 125 100 70 20 Ag Az Ag 70 90 100 50 150 120 60 -10 The probabilities are-S, :0.4, S2 : 0.25, S3:0.2 and S. : 0,15. Two questions arise: 1. What course of action would be recommended in this situation? 2. What is expected value of perfect information?
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