Discuss the expected value of perfect information


Discuss the below:

In a survey done by the local Better Buy store, questions were asked of 300 households that actually purchased big-screen televisions. The table at left indicates the consumer's responses to whether the television purchased was a plasma screen and whether they also purchased a DVR in the past 12 months.

Q-1a: What is the probability that a randomly selected big-screen television purchase in this sample is a purchase of a plasma-screen television?

Q-1b: What is the probability that a randomly selected household that purchased a big screen television purchased a plasma-screen AND a DVR?

Q-1c: What is the probability that a randomly selected household purchased a DVR, given that the household purchased a plasma-screen television?

An investor is to purchase one of three types of real estate. The investor must decide among an apartment building, an office building, and a warehouse. The future states of nature that will determine how much profit the investor will make are good economic conditions and poor economic conditions. The profits that will result from each decision in the event of each state of nature are shown at left.

Q-2a: Which investment has the highest EMV?

Q-2b: What is the expected value of perfect information in this problem?

Attachment:- Decision analysis.rar

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