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    Decision Trees and Payoff Tables

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    The following payoff table shows the profit for a decision problem with three states of nature and two decision alternatives:

    State of Nature
    DA s1 s2 s3
    d1 -20 40 100
    d2 10 45 70

    I need to state of nature probabilities are: P(s1) = 0.35, P(s2) = 0.35 and P(s3) = 0.30.

    a. Use a decision tree to recommend a decision.

    b. Use the expected value to recommend a decision.

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    Solution Summary

    Decision tees and payoff tables are investigated. The solution is detailed and well presented.