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    Calculation of Expected Opportunity Loss

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    The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature.

    States A1 A2 A3
    1 12 -2 8
    2 4 10 5

    where: S1 is state of nature 1 A1 is action alternative 1
    S2 is state of nature 2 A2 is action alternative 2
    A3 is action alternative 3

    Referring to the above table, the opportunity loss for A2 when S1 occurs is
    a. -2
    b. 0
    c. 5
    d. 14

    Referring to the above table, if the probability of S1 is 0.2 and S2 is 0.8,
    then the expected opportunity loss (EOL) for A1 is
    a. 0
    b. 1.2
    c. 4.8
    d. 5.6

    See attached file for full problem description.

    © BrainMass Inc. brainmass.com June 3, 2020, 7:30 pm ad1c9bdddf
    https://brainmass.com/statistics/probability/expected-opportunity-loss-payoff-101065

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    Solution Preview

    Please see the attached file.

    The following payoff table shows profits associated with a set of 3
    Alternatives under 2 possible states of nature.

    States A1 A2 A3
    1 12 -2 8
    2 4 10 5 ...

    Solution Summary

    The solution gives step by step procedure for the calculation of Expected opportunity loss (EOL).

    $2.19

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