-Consider the Oil Drilling Game Depicted in Figure 16

Multiple Choice

-Consider the Oil Drilling Game depicted in Figure 16.5. PETROX must decide whether to purchase a lease to drill for oil. Based on preliminary surveys, PETROX knows that there is an 80 percent chance that there is no oil (NO) and a 20 percent probability that oil is present (O) . PETROX decides to conduct seismic surveys. The probability that the survey is negative when oil is present is P(!*O) = 0.5. The probability that there the survey is positive when no oil is present is P(+*NO) = 0.5. Payoffs are in millions of dollars. What is PETROX's conditional expected payoff from drilling?

A) $12 million
B) $8 million
C) !$22 million
D) !$38 million
E) !$42 million