Quantitative methods: | Probability homework help

Quantitative methods: | Probability homework help

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In your own words, explain how to obtain the “expected value of perfect information” for any payoff table, which has probabilities associated with each state of nature. Then, provide an example, drawing from any of the payoff tables in Problems 1-17 in the back of Chapter 12. If no probabilities are given for the states of nature, then assume equal likelihood

Table 1-17. Allen Abbott has a wide-curving, uphill driveway leading to his garage. When there is a heavy snow, Allen hires a local carpenter, who shovels snow on the side in the winter, to shovel his driveway. The snow shoveler charges $30 to shovel the driveway. Following is a probability distribution of the number of heavy snows each winter:
Heavy Snows                 Probability
1                                                  .13
2                                                  .18
3                                                  .26
4                                                  .23
5                                                  .10
6                                                  .07
7                                                 .03
                                                 1.00
Allen is considering purchasing a new self-propelled snowblower for $625 that would allow him, his wife, or his children to clear the driveway after a snow. Discuss what you think Allen’s decision should be and why

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