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Solutions Chapter 12 - 12.2 0.1 20 0.2 EMV(A = 7.00 A 0.6...

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186 12.2. 20 10 5 0 0.1 0.2 0.6 0.1 A B 6 A = 20 0.1 A = 10 0.2 A = 5 0.6 A = 0 0.1 20 6 A B 10 6 A B 5 6 A B 0 6 A B Perfect Information EMV(A) = 7.00 EMV(B) = 6.00 EMV(Info) = 8.20 EVPI = EMV(Info) - EMV(A) = 8.20 - 7.00 = 1.20. This decision tree model is saved in the Excel file “Problem 12.2.xls”. 12.3. EVPI = 0 because one would still choose A regardless of A’s outcome. To state it slightly differently, no matter what you found out about A’s outcome, your decision would still be the same: Choose A. Because the information cannot change the decision, the expected value of the information equals zero.
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