ajaz_eco204_2009_HW_18_charts

ajaz_eco204_2009_HW_18_charts - $600m (0.2) $200m Drill...

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Decision Drill Chance $600m (0.2) $200m (0.18) $0m (0.32) $120m (0.3) Not Drill $0 Ajaz Hussain. Department of Economics. University of Toronto (St. George)
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Drill $120m Drill $120m EV = $120m $600m (0.2) $200m (0.18) $0m (0.32) $120m (0.3) Not Drill $0 $0 Ajaz Hussain. Department of Economics. University of Toronto (St. George)
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Drill or Not Drill? Drill Chance U($600m) (0.2) U($200m) (0.18) U($0m) (0.32) U( $120m) (0.3) Not Drill U($0) Ajaz Hussain. Department of Economics. University of Toronto (St. George)
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Drill 56.1 EU[Drill] = 56.1 EU = 56.1 100 (0.2) 70 (0.18) 50 (0.32) 25 (0.3) U(Not Drill) = 50 50 Ajaz Hussain. Department of Economics. University of Toronto (St. George)
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Settle? Trial Chance $1m + $0.1m (0.2) $0.6m + $0.1m (0.5) $0 + $0.1m (0.3) Settle Chance High (0.5) Reject Go to Trial Accept Low (0.5) Reject Go to Trial Accept Ajaz Hussain. Department of Economics. University of Toronto (St. George)
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ajaz_eco204_2009_HW_18_charts - $600m (0.2) $200m Drill...

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