Lecture 4

Lecture 4 - Lecture 4 Monday, February 04, 2008 9:29 AM 1....

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Lecture 4 Monday, February 04, 2008 9:29 AM 1. Decision theory: decision making without taking into account strategy. Answer to all maybe. a. Higher probability of success b. Higher yield c. Negative yield. 2. To make a decision: rational decision maker chose the one with the higher payoff. Simplistic  model without uncertainty. a. Study, sure to pass, if Benefit is 20, cost is 10, payoff is 10 b. Not study, sure to fail, benefit is 0, cost is zero, payoff is zero 3. With uncertainty, to make a decision, Rational Choice theory, chose the choice with higher  expected yield. a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p . Choices B Cost Payoff Study and Pass 20 10 10 Study and Fail 5
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10 -5 Don't study and Fail 0 0 0 q. r. s. t. u. v. Probability Percentile 40 60 w. Expected payoff for studying: A calculation of payoff weighed according to probability i.
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This note was uploaded on 05/22/2008 for the course POL V53.0700 taught by Professor Satyanath during the Spring '08 term at NYU.

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Lecture 4 - Lecture 4 Monday, February 04, 2008 9:29 AM 1....

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