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    Payoff table

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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 table above, if the probability of S1 is 0.2 and S2 is 0.8, then the expected opportunity loss (EOL) fro A1 is

    A. 0
    B. 1.2
    C. 4.8
    D. 5.6

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    Please see the file attached for detailed calculations. ...

    Solution Summary

    Solution contains calculations of the expected opportunity loss (EOL)