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    Expected value of perfect information

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    The local operations manager for the IRS must decide whether to hire 1, 2, or 3 temporary workers. He estimates that net revenues will vary with how well taxpayers comply with the new tax code.

    low medium high
    # of workers compliance compliance compliance
    1 50 50 50
    2 100 60 20
    3 150 70 -10

    If he thinks the chances of low, medium, and high compliance are 20%, 30%, and 50%, respectively, what is his expected value of perfect information?

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    https://brainmass.com/statistics/central-tendency/expected-value-of-perfect-information-120714

    Solution Preview

    The local operations manager for the IRS must decide whether to hire 1, 2, or 3 temporary workers. He estimates that net revenues will vary with how well taxpayers comply with the new tax code.

    low medium high
    # of workers compliance ...

    Solution Summary

    The solution calculates the expected value of perfect information.

    $2.19