# Optimal Decision and Expected Value of Perfect Information

Problem 4

In the following profit payoff table for a decision problem with two states of nature and three decision alternatives, the probabilities for s1 and s2 are: p(s1)=0.8 and p (s2)= 0.2

S=State of Nature

D=Decision alternatives

S1 S2

d1 15 10

d2 10 12

d3 8 20

a. What is the optimal decision?

b. Find the EVPI (expected value of perfect information)

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Problem 4

In the following profit payoff table for a decision problem with two states of nature and three decision alternatives, the probabilities for s1 and s2 are: p(s1)=0.8 and ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer what is the optimal decision and calculate the EVPI.

$2.19