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# HW Review - PowerPoint PPT Presentation

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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Presentation Transcript

Suppose a game has a payoff matrix of:

Calculate the expected values for the following strategy:

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.

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.

• Problems to complete from section 9.2

• Pg. 452 #3, 4