Expected value, indifference probabilities, expected utility

Related BrainMass Solutions

• Product expected value approach-expected utility

  The product expected value approach-expected utility is determined.

• Quantitative Methods of Business

  Please see attached file The solution covers topics such as payoff tables, indifference probability, risk avoidance, risk taking, risk neutral, utility, expected utility approach and the expected value approach. Attached as Excel.

• Expected Value, Quanitative Analysis

  Using the expected value approach, which decision is preferred? b. For the lottery having a payoff of $100,000 with probability p and $0 with probability (1-p), two decision makers expressed the following indifference probabilities.

• Probability: Expected Value and Decision Analysis

  0.00004 Probabilities 0.000003448 0.999996552 Expected utility 0.99992 -7.9999724 $-7.00 Do not buy a lottery ticket.

• Quantitative Methods and Decsion Making : Expected Values and Expected Utility

  Using the expected value approach, which decision is preferred? b. For the lottery having a payoff of $100,000 with probability p and $0 with probability (1-p), three decision makers expressed the following indifference probabilities.

• Choice Under Uncertainty

  That is, EV = ∑PriXi Expected utility is calculated in the same way as expected value, except that the utility associated with a payoff [U(X)] is substituted for its value.

• Business Math : Probability, Binomial Distributions, Decision-Making, Payoff Tables and Risk Management

  Suppose Paul has defined the utility of -$80K to be 0 and the utility of $160K to be 80. What would be the utility values for -$40K, $20K, and $100K based on the indifference probabilities? c. Suppose P(s1) = .4, P(s2) = .3, and P(s3) = .3.

• Expected utility approach

  Expected value at the indifference probability 4.00024 Since the expected value for indifference probability is higher than the expected value with realistic chances of winning, the decision maker will not purchase the lottery ticket.

• Brief discussion and an example of the difference between Savage's and Jeffrey's frameworks for decision theory.

  In Jeffrey's model, the weights of the average for the value of an act should be conditional probabilities of states given the act. We shall call this the Jeffrey Expected Utility (JEU).