You're a contestant on a TV game show. In the final round of the game, if contestants answer a question correctly, they will increase their current winnings of $3 million to $4 million. If they are wrong, their prize is decreased to $2,250,000. You belleve you have a 25% chance of answering the question correctly. Ignoring your current winnings, your expected payoff from playing the final round of the game show is $ Given that this is , you play the final round of the game. (Hint: Enter a negative sign If the expected payoff is negative.) The lowest probability of a correct guess that would make the guessing in the final round profitable (In expected value) Is what probability does playing the final round yleld an expected value of zero?) (Hint: At

You're a contestant on a TV game show. In the final round of the game, if contestants answer a question correctly, they will increase their current winnings of $3 million to $4 million. If they are wrong, their prize is decreased to $2,250,000. You belleve you have a 25% chance of answering the question correctly. Ignoring your current winnings, your expected payoff from playing the final round of the game show is $ Given that this is , you play the final round of the game. (Hint: Enter a negative sign If the expected payoff is negative.) The lowest probability of a correct guess that would make the guessing in the final round profitable (In expected value) Is what probability does playing the final round yleld an expected value of zero?) (Hint: At

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You're a contestant on a TV game show. In the final round of the game, if contestants answer a question correctly, they will increase their current winnings of $3 million to $4 million. If they are wrong, their prize is decreased to $2,250,000. You believe you have a 25% chance of answering the question correctly. Ignoring your current winnings, your expected payoff from playing the final round of the game show is. Given that this is ______________ (POSITIVE/NEGATIVE), you___________ (SHOULD/ SHOULD NOT) play the final round of the game. (Hint: Enter a negative sign if the expected payoff is negative.) The lowest probability of a correct guess that would make the guessing in the final round profitable (in expected value) is (Hint: At what probability does playing the final round yield an expected value of zero?)
In a final round of a MegaMillion TV show, a contestant has won $1 millionand has a chance of doubling the reward. If he loses his winnings drop to$500,000. The contestant thinks his chances of winning are 50%. Should heplay? What is the lowest probability of a correct guess that will make his betprofitable? Show work
Question 5 You negotiate with a retailer over a contract according to which the retailer would buy a large fraction of your current production for next year. The retailer is perfectly informed about consumer demand, but you do not know whether demand is high or low. You only know that the probability for high demand is 80%. If demand is high, the retailer's profit is £5 million minus what he pays to you according to your contract. If demand is low, the retailer's profit is £3 million minus what he pays to you. Your costs of producing the output specified in the contract are £1 million. You can make sequential offers for the retailer's total payment for you to deliver a fixed quantity of your production. As you know that your competitor is also seeking a similar contract with this retailer, and the retailer can only supply one firm due to limited shelf space, you know that you can only make at most two offers. If your first offer is rejected, the retailer will strike the deal with your…
how do you do you find the expected payback for this problem? Find the expected payback for a game in which you bet $1010 on any number from 00 to 399.399. If your number comes up, you get $400400.
Suppose that you graduate from college next year and you have two career options: 1) You will start a job in an investment bank paying a $100,000 annual salary. 2) You will start a Ph.D. in economics and, as a student, you will receive a $20,000 salary. You are bad with decisions, so you are letting a friend of yours decide for you by flipping a coin. The probabilities of options 1 and 2 are, therefore, each 50%. a) Illustrate, using indifference curves, your preferences regarding consumption choices in the two different states of the world. Assume that you are risk-averse. [Include also the 45 degrees line in your figure] b) Now show how the indifference curves would change if you were substantially more risk averse than before. Explain. c) Now show the indifference curves if you are risk neutral and if you are risk loving. d) Show your expected utility preferences from point a) mathematically.
Consider a game where there is a $2,520 prize if a player correctly guesses the outcome of a fair 7-sided die roll.Cindy will only play this game if there is a nonnegative expected value, even with the risk of losing the payment amount.What is the most Cindy would be willing to pay?
Tom and Jerry are contestants on Jeopardy. Tom is leading with an accumulation of $12000, while Jerry trails closely at $10000. In the final segment of the show, contestants must wager an amount not exceeding their current accumulation that they will answer the last question of the night correctly. Wagers are made before the question is revealed. If the contestant answers correctly, they have their wager added to their accumulation. Otherwise, it is deducted. Jerry is a game show master and expects to answer correctly with 90% certainty. Tom is less experienced and only has a 55% chance. Their utilities of wealth are given by uT (x) = x1 and u' (x) 50xi a) How much should Tom wager to maximise his expected utility? b) How much should Jerry wager to maximise his expected utility? c) In expectation, how much money the expected winner of the show is going to win?
Professor can give a TA scholarship for a maximum of 2 years. At the beginning of each year professor Hahn decides whether he will give a scholarship to Gong Yi or not. Gong Yi can get a scholarship in t=2, only if he gets it in t=1. Basically, the professor and TA will play the following game twice. TA can be a Hardworking type with probably 0.3 and can be a Lazy type with a probability of 0.7. Professor does not know TA's type. If TA is hard working, it will be X=5 and TA will always work if he gets a scholarship. If TA is lazy, it will be X= 1. There is no time discount for t=2. Find out a Perfect Bayesian Equilibrium of the game.
In a final round of a MegaMillion TV show a contestant has a won $1 million and has a chance of doubling the reward. If he loses his winnings drop to $500,000. The contestant thinks his chances of winning is 50%. Should he play? What is the lowest probability of a correct guess that will make his betprofitable? Please show your work.
Player 1 and Player 2 will play one round of the Rock-Paper-Scissors game. The winner receives a payoff +1, the loser receives a payoff -1. If it is a tie, then each player receives a payoff zero. Suppose Player 2 is using a non-optimal strategy: he/she plays Rock with probability 35%; Paper with probability 45%; and Scissors with probability 20%. Given that Player 1 knows Player 2 is using this strategy, the best response of Player 1 is to play O a mixed strategy with probability 1/3 each (Rock, Paper and Scissors) O Scissors with probability 100% O any strategy (any strategy is a best response for Player 1) O Rock with probability 100% O Paper with probability 100%
Two partners start a business. Each has two possible strategies, spend full time or secretly take a second job and spend only part time on the business. Any profits that the business makes will be split equally between the two partners, regardless of whether they work full time or part time for the business. If a partner takes a second job, he will earn $20,000 from this job plus his share of profits from the business. If he spends full time on the business, his only source of income is his share of profits from this business. If both partners spend full time on the business, total profits will be $200,000. If one partner spends full time on the business and the other takes a second job, the business profits will be $80,000. If both partners take second job, the total business profits are $20,000. a) This game has no pure strategy Nash equilibria, but has a mixed strategy equilibrium. b) This game has two Nash equilibria, one in which each partner has an income of $100,000 and one in…
Jane and Bill are apprehended for a bank robbery. They are taken into separate rooms and questioned by the police about their involvement in the crime. The police tell them each that if they confess and turn the other person in, they will receive a lighter sentence. If they both confess, they will be each be sentenced to 30 years. If neither confesses, they will each receive a 20-year sentence. If only one confesses, the confessor will receive 15 years and the one who stayed silent will receive 35 years. The table below represents the choices available to Jane and Bill. If Jane trusts Bill to stay silent, what should she do? A = Confess; B = Stay Silent (Each results entry lists Janes's sentence first (in years), and Bill's sentence second.) Jane A B Bill A (30, 30) (15, 35) B (35, 15) (20, 20)