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Explain the expected value approach

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Question: A firm has three investment alternatives. Payoffs are in thousands of dollars.

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a. Using the expected value approach, which decision is preferred?

b. For the lottery having a payoff of $100,000 with probability p and $0 with probability (12 p), two decision makers expressed the following indifference probabilities. Find the most preferred decision for each decision maker using the expected utility approach.

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c. Why don't decision makers A and B select the same decision alternative?

Reference no: EM131669270

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