The probability of this tactic succeeding is 12 in which


The probability of this tactic succeeding is (1/2), in which case he will get a payoff of 3, and the probability of it failing is (1/2), in which case he gets a payoff of -4. If he doesnt bring up the issue he neither gains nor loses and so his payoff is 0.

a) Calculate expected utility for bringing it up.
b) Is it rational to bring up the issue?
c) Suppose the probability of it succeeding is "p" and the probability of it failing is "1-p". What is the expected utility for bringing up the issue?
d) How high does "p" have to be for it to be rational to raise the issue?

 

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Finance Basics: The probability of this tactic succeeding is 12 in which
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