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Problem 4: Continuing with problem 3, a firm open to conduct a market research involving the proposed venture and using analytical tools can give an accurate information, thus gave the following info: Probability of a favorable market given a favorable study is 0.82 Probability of an unfavorable market given a favorable study is 0.18 Probability of a favorable market given an unfavorable study is 0.11 Probability of an unfavorable market given an unfavorable study is 0.89 Probability of a favorable research study is 0.55 Probability of an unfavorable research study is 0.45 Required: Develop a new decision tree for the doctors to reflect the options now open with the market study. Use the EMV approach to recommend a strategy. What is the expected value of information?

Problem 4: Continuing with problem 3, a firm open to conduct a market research involving the proposed venture and using analytical tools can give an accurate information, thus gave the following info: Probability of a favorable market given a favorable study is 0.82 Probability of an unfavorable market given a favorable study is 0.18 Probability of a favorable market given an unfavorable study is 0.11 Probability of an unfavorable market given an unfavorable study is 0.89 Probability of a favorable research study is 0.55 Probability of an unfavorable research study is 0.45 Required: Develop a new decision tree for the doctors to reflect the options now open with the market study. Use the EMV approach to recommend a strategy. What is the expected value of information?

Big Ideas Math A Bridge To Success Algebra 1: Student Edition 2015
Big Ideas Math A Bridge To Success Algebra 1: Student Edition 2015
1st Edition
ISBN:9781680331141
Author:HOUGHTON MIFFLIN HARCOURT
Publisher:HOUGHTON MIFFLIN HARCOURT
Chapter4: Writing Linear Equations
Section: Chapter Questions
Problem 14CR
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Problem 4:

Continuing with problem 3, a firm open to conduct a market research involving the proposed venture and using analytical tools can give an accurate information, thus gave the following info:

            Probability of a favorable market given a favorable study is 0.82

            Probability of an unfavorable market given a favorable study is 0.18

            Probability of a favorable market given an unfavorable study is 0.11

            Probability of an unfavorable market given an unfavorable study is 0.89

            Probability of a favorable research study is 0.55

            Probability of an unfavorable research study is 0.45

Required:

  1. Develop a new decision tree for the doctors to reflect the options now open with the market study.
  2. Use the EMV approach to recommend a strategy.
  3. What is the expected value of information?
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