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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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Hw review

HW Review

Suppose a game has a payoff matrix of:

Calculate the expected values for the following strategy:


9 2 mixed strategies

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 Acme’s average fine per day?

  • Write a payoff matrix

  • Write the mixed strategies.

  • Find the expected value.


9 2 mixed strategies1

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:

  • $2 million 20% of the time

  • $1 million 20% of the time

  • $.5 million 20% of the time

  • No insurance 40% of the time

    What is her average annual loss?

  • Write a payoff matrix in terms of millions

  • Write the mixed strategies.

  • Find the expected value.


9 2 mixed strategies2

9.2 Mixed Strategies

  • Problems to complete from section 9.2

    • Pg. 452 #3, 4


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