Reference no: EM132465057

Eleanor wants to get a job at Google so she's going to university to study computer science. She has to decide between UTM and Western.

Suppose 1/100 of UTM's computer science students get jobs at Google and the rest get jobs at RIM. For Eleanor, a job at Google has utility 200 while a job at RIM has utility 50.

a. What is the expected utility of going to UTM for Eleanor?

Suppose Western students have better odds of getting a job at Google: 5/400. And 360/400 students go to work at Amazon, which Eleanor would prefer to RIM. On the other hand, the re- maining 35/400 of them don't get a job at all, which has utility zero for Eleanor.

After thinking about it, she can't decide: UTM and Western seem like equally good options to her.

b. How much utility does working at Amazon have for Eleanor?

Suppose Eleanor ends up going to UTM, and now she's about to graduate. Unfortunately, Google isn't hiring any more. The only jobs available are at Amazon and RIM. She would have to take a special summer training program to qualify for a job at Amazon, though. And that would mean she can't get a job at RIM. RIM is offering her a job, but she has to take it now or never.

So, she has to either take the guaranteed job at RIM right now, or gamble on the summer program. The summer program could get her a job at Amazon, or it could leave her unemployed.

c. How high would the probability of getting a job at Amazon have to be for the special summer program to be the better option?