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What is the expected monetary value for shifter

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Reference no: EM133182531

Question 1 - Vancouver Metaverse Network must decide on which one of two new Web3.0 games to create: SHIFTER or MAVIO. The costs of producing and operating the two games are similar and the average monthly subscription for either game could be low (23,000 subscribers), medium (73,000 subscribers), or high (154,000 subscribers).

If the company chooses to create SHIFTER, they will charge $23 per account for monthly subscription, and the probabilities of medium and low subscriptions are 0.37 and 0.16 respectively.

For MAVIO, there is a 51% chance that a competitive game will appear on the market. The probability of low subscription is 0.16 if no competitive game appears and 0.42 if a competitive game appears. The probability of medium subscription is 0.24 whether or not competition appears. The company will charge $27/month per account for subscription to MAVIO if no competitive game appears but will only charge $17/month if competition appears.

Construct a decision tree for the problem, where payoffs are total monthly subscription in dollars.

For example, if SHIFTER is created and subscription is medium, then subscription dollars will be $23*73000 = $1,679,000.

Report answers accurate to the nearest dollar.

1. What is the expected monetary value for SHIFTER?

2. What is the expected monetary value for MAVIO if there is no competition?

3. What is the expected monetary value for MAVIO if competition appears?

4. What is the expected monetary value for MAVIO?

5. What is the expected monetary value of the optimal decision?

6. What is the optimal decision?

Reference no: EM133182531

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