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Answer to Question #30338 in Other Math for victor

Question #30338
In this chapter a decision tree was developed for John Thompson. After completing the analysis, John was not completely sure that he is indifferent to risk. After going through a number of standard gambles, John was able to assess his utility for money. Here are some of the utility assessments: U( - $190,000) = 0, U( - $180,000) = 0.15,
U(- $30,000) = 0.10, U(-$20,000) = 0.15,
U (-$10,000) = 0.2, U($0) = 0.3,
($90,000) = 0.5, U($100,000)=0.6 U=($190,000)=.95
and U($200,000) = 1.0. If John maximizes his expected utility, does his decision change?
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Assignment Expert
25.09.14, 17:51

Dear Elvis Ferkic. How have you obtained the value of 3.49? We are not sure of it. There exists a special add-in (TreePlan) for Excel to set up and solve decision tree problems. See video at http://www.ehow.com/video_12232131_draw-decision-tree-excel.html to understand how to draw a decision tree in Excel.

Elvis Ferkic
31.08.14, 03:37

Is the answer for the problem 3.49? How do you draw the decision tree on Excel?

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