A payoff table is given as If the probabilities of d1 d2 and

A payoff table is given as If the probabilities of d1, d2, and d3 are .3 .4, and .3, respectively, then what choice should be made under expected value?

Solution

As Expected value is more for d3 , d3 is the best choice of all

	Payoff table
	s1	s2	s3		prob	EV
d1	250	450	500	1200	0.3	360
d2	300	-250	700	750	0.4	300
d3	400	500	800	1700	0.3	510