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Refer to the Following Payoff Table

Question 2

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Refer to the following payoff table:
Refer to the following payoff table:   There is an option of paying $100 to have research done to better predict which state of nature will occur. When the true state of nature is S1, the research will accurately predict S1 60% of the time. When the true state of nature is S2, the research will accurately predict S2 80% of the time. What is the expected value of perfect information? A)  40 B)  45 C)  75 D)  85 E)  100
There is an option of paying $100 to have research done to better predict which state of nature will occur. When the true state of nature is S1, the research will accurately predict S1 60% of the time. When the true state of nature is S2, the research will accurately predict S2 80% of the time.
What is the expected value of perfect information?


A) 40
B) 45
C) 75
D) 85
E) 100

Correct Answer:

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