Determine the expected value of perfect information


Discuss the below:

Q1: A business owner is trying to decide whether to buy, rent, or lease office space and has constructed the following payoff table based on whether business is brisk or slow.

1854_tbl.jpg

Q2: If the probability of brisk business is .40 and for slow business is .60, determine the expected value of perfect information is:

a) 12
b) 55
c) 57
d) 69

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Basic Statistics: Determine the expected value of perfect information
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