Oil%20Example%20Solution

Oil%20Example%20Solution - EWMBA201a Oil Example Full...

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EWMBA201a Oil Example Full Decision Tree Extract all oil -150 Mediocre site [p = 0.4] -300 = 10*70 - 1000 Value of info = +146-96 V = 40 =5 0 Extract easy oil Value of info = +.1*(750-250) 30 0 40 = 2*70 - 100 Extract all oil -25 Acquire info about site OK site [p = 0.5] 50 = 15*70 - 1000 V = 110 146 0 EV = 146 Extract easy oil 55 110 = 3*70 - 100 Extract all oil 350 Great site [p = 0.1] 750 = 25*70 - 900 V = 750 Extract easy oil 130 Buy mineral rights 250 = 5*70 - 100 EV = 146 Mediocre Site [p = 0.4] -150
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This note was uploaded on 09/15/2009 for the course EWMBA 201A taught by Professor Wolfram during the Fall '07 term at Berkeley.

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