Assignment Choice under Risk

Published by Mario Oettler on

Last Updated on 28. April 2023 by Martin Schuster

Task

What alternative should you select if the following pay-off and likelihood information is given?

 S1S2S3S4
Probability0.10.40.30.2
A1101058
A2910128
A31532-2
A414430

Solution

AlternativeExpected Pay-Off
A18.1
A210.1
A32.9
A43.9

A2 has the highest expected pay-off and should be selected.

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