Find the alternative would be selected according to expected value and utility.
For the payoff table below the decision maker will use P (s_{1}) = .15, P (s_{2}) = .5, and P (s_{3}) = .35.

s_{1}

s_{2}

s_{3}

d_{1}

5000

1000

10,000

d_{2}

15,000

2000

40,000

1) describe what alternative would be chosen according to expected value?
2) For the lottery having a payoff of 40000 with probability p and 15,000 with probability (1p) the decision maker expressed the following indifference probabilities.
Payoff

Probability

10,000

.85

1000

.60

2000

.53

5000

.50

Let U(40,000) = 10 and U(15,000) = 0 also find the utility value for each payoff.
c. describe what alternative would be chosen according to expected utility?