Given below is the payoff for three decision alternatives, d1, d2 & d3 under three staes of nature, S1, S2, & S3 with probabilities of 0.3, 0.3 & 0.4 respectively.

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Budget: $1.5 Subject: Statistics due 1 year ago

Given below is the payoff for three decision alternatives, d1, d2 & d3 under three staes of nature, S1, S2, & S3 with probabilities of 0.3, 0.3 & 0.4 respectively. What decison should be made based on the EMV criterion? You must show your working.

Payoff Table (in 000’s $)
S1 S2 S3
Investment A d1 300 75 50
Investment B d2 100 75 50
Investment C d3 75 75 75
Probabilities 0.3 0.3 0.4

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roel

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