Suppose you have hired a new worker, unfortunately you do not know if the worker is a shirker or a hard worker. Suppose working hard raises the probability of making a sale from 40% to 80% (thus raises the probability of making a commission C by the same percentage). If the cost of working harder is $150,what commission C should you offer the worker to provide an incentive to work hard.

Solution Summary

Solution calculates the minimum commission to provide an incentive for hard work through expected payoff to a new employee. 40 words.

You have invested in a project that has the following payoff schedule:
Payoff Probability of Occurrence
$40 .15
$50 .20
$60 .30
$70 .30
$80 .05
What is the expected value of the investment's payoff? (Round to the nearest $1)
A) $70
B) $60
C) $59
D) $65

What is decision theory? What is the difference between a payoff table and an expectedpayoff table? In the following payoff table, let P(S1) = 0.30, P(S2) = 0.50, and P(S3) = 0.20. Compute the expected monetary value for each of the alternatives. What decision would you recommend?
See attached file

Expectedpayoff corresponding to various levels of business expansion and economic conditions faced by Ramcast Cable Inc. is given in the table below. The probabilities of the events are also given. What is each expected monetary value (EV) of each alternative below, and the maximum expected monetary value (EV) in the payoff mat

What is decision theory? What is the difference between a payoff table and an expectedpayoff table? In the following payoff table, let P(S1) = 0.30, P(S2) = 0.50, and P(S3) = 0.20. Compute the expected monetary value for each of the alternatives. What decision would you recommend?
State of Nature
Al

Please help with the following problem.
Tea Time is considering selling juices along with its other products.
States of Nature
High Sales Med. Sales Low Sales
A(0.2) B(0.5) C(0.3)
3000 2000 -6000
0 0 0
A1 (

Suppose you make a $2,000 investment in a risky venture. There is a 60% chance that the payoff from the investment will be $5,000, a 15% chance that you will just get your money back, and a 25% chance that you will receive nothing at all from your investment.
a. Find the expected value of the payoff from your investment of $2

For the payoff table below, the decision maker will use P(s1) = .15, P(s2) = .5, and P(s3) = .35.
s1 s2 s3
d1 -5000 1000 10,000
d2 -15,000 -2000 40,000
a. What alternative would be chosen according to expected value?
b. For a lottery having a payoff of 40,000 with probability p and -15,000 with probability (1-p), the

A payoff table is given as
s1 s2 s3
d1 10 8 6
d2 14 15 2
d3 7 8 9
a. What decision should be made by the optimistic decision maker?
b. What decision should be made by the conservative decision maker?
c. What decision should be made under minimax regret?
d. If the probabilities of s1, s2, and s3 are .2, .4,