HW Review. Suppose a game has a payoff matrix of: Calculate the expected values for the following strategy:. 9.2 Mixed Strategies. The Acme Chemical Corporation has two plants. A single inspector is assigned to check that the plants do not dump waste into the river.

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HW Review

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Calculate the expected values for the following strategy:

9.2 Mixed Strategies

The Acme Chemical Corporation has two plants. A single inspector is assigned to check that the plants do not dump waste into the river.

If he discovers plant A dumping waste, Acme is fined $20,000.

If he discovers plant B dumping waste, Acme is fined $50,000.

Suppose the inspector visits one of the pants each day and he chooses, on a random basis to visit plant B 60% of the time.

Acme schedules dumping from its two plants on a random basis, one plant per day, with plant B dumping waste on 70% of the days. How much is Acmeâ€™s average fine per day?

Write a payoff matrix

Write the mixed strategies.

Find the expected value.

9.2 Mixed Strategies

A small business owner must decide whether to carry flood insurance. She may insure her business for:

$2 million for $100,000

$1 million for $50,000 or

$.5 million for $30,000. Her business is worth $2 million.

There is a flood serious enough to destroy her business an average of every 10 years. In order to save insurance premiums, she decides each year on a probabilistic basis how much insurance to carry.She chooses: