Public policy could result in three possible outcomes

Reference no: EM13685310

Presume a proposed public policy could result in three possible outcomes: (1) present value of net benefits of $4,000,000, (2) present value of net benefits of $1,000,000, or (3) present value of net benefits of –$10,000,000 (i.e., a loss). Presume society is risk-neutral and the probability of occurrence of each of these three outcomes is, respectively, 0.85, 0.10, and 0.05, must this policy be pursued or trashed? Why?

Reference no: EM13685310

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