# Calculation of Expected Opportunity Loss

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.

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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).