- (20%) A group of medical professionals is considering the construction of a private clinic. If the medical demand is high the physician could realize a net profit of $100,000. If the market is not favourable they could lose $40,000. Their best guess is 50%-50% for the clinic to be successful. Construct the decision tree. Monetary Value(
- (50%) The same physicians above have been approached by a market research company that offered to perform a study at a fee of $5,000. Using the Bayes’ theorem they make the following probabilities:
- (10%) Describe how you would determine the best decision using EMV criterion with a decision tree.
- (10%) What is the purpose of the utility theory?
- (10%) What information should be included into the decision tree?
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