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Decision Theory Lab-1

# Decision Theory Lab-1 - Lab for Statistical Decision Theory...

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Lab for Statistical Decision Theory Data Explanation: Same as the data used in Practicum 3 Problem 1 For the target TAR1, (a) Repeat Practicum 2 with exactly the same options used in the practicum. (b) Write down the profit equation for each decision where p 2 is the probability for "Tar1=2" and p 1 is the probability for "Tar1=1'? (Note: probability for TAR1=0=1- p 1 -p 2 ) (c) Suppose the company can mail all customers without coupon. Create a variable representing the profit of this action. (Note: The revenue for one ordmail is \$20 and it cost \$0.5 per mail) (d) Suppose the company can mail all customers with coupon. Create a variable representing the profit for this action. (Note: The coupon worth \$2 for each customer who responses and the customer suppose to buy 10% more if there is a coupon.) (e) Create a variable representing perfect prediction with coupon. (f) Use variable "CP_tar1_" representing the profit based on the model profit matrix or use ordmail to compute the profit representing the model profit matrix.
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