Possible two crops to plant for the coming season

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Hayden is a farmer deciding between two possible two crops to plant for the coming season: {corn, beans}. The two possible states of Nature are {good weather, bad weather}, and while beans are more weather resistant, corn is more profitable. If Hayden plants corn (a corn lottery, LC), there will be 0.7 percent chance of good weather, yielding a gain of $20 mil. in profits, and a 0.3 percent chance of bad, yielding a loss of $8 mil. Planting beans (LB) gives a 0.9 percent chance of good weather, resulting in $10 mil. in gains, and a 0.1 of bad, resulting in only a $2 mil. loss.

Reference no: EM132492255

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