The following is a payoff table giving profits for various situations.
States of Nature
Alternatives |
A |
B |
C |
Alternative 1 |
100 |
120 |
180 |
Alternative 2 |
120 |
140 |
120 |
Alternative 3 |
200 |
100 |
50 |
Do Nothing |
0 |
0 |
0 |
The probabilities for states of nature A, B, and C are 0.3, 0.5, and 0.2, respectively.
- what are the expected values for each alternative?
- What decision should be made under expected value?
- What is the EVPI?