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Maximum expected value rule a decision maker

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The following payoff matrix shows the profit outcomes for three projects, A, B, and C, for each of two possible product prices.  There is a 60% probability the price will be $10 and a 40% probability the price will be $20.

Profit

Project

P = $10

P = $20

A

20

80

B

40

60

C

-26

140

Using the maximum expected value rule a decision maker would choose

a. A.

b. B.

c. C.

d. impossible to tell from the information

Using coefficient of variation rule a decision maker would choose

a. A.

b. B.

c. C.

d. can't use this rule under these circumstances

Reference no: EM131049487

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