BUSMGT 2321 Lecture Notes - Lecture 2: Decision Tree Learning, Emv
26 Mar 2018
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8 - 8 = 0 m m. 8 - 5 = 3 m m. 8 - -9 = 17 m m. Monday morning qb approach - "oh i would"ve done this there" m m emvsm = 7p + 8(1-p) m 9 m emvlar = 20p + -9(1-p) Under risk we know the probability of each state. Can put these p"s in an indifference table. Equally likely: (p = . 5) take average of the states. Can put these p"s in an indifference table p p. Medium m m emvmed = 5 + 9p positive slope. m 9 m emvlar = -9 + 29p large positive slope. Large as we go w-s, go up greatly. m m emvsm = 8 - p. m 9 m emvlar = -9 + 29p.
