Eunice, in The scenario, wants to determine how each of the 3 companies will decide on possible new investments. He was able to determine the new investment pay off for each of the three choices as well as the probability of the two types of market. If a company will launch product 1, it will gain 125,000 if the market is successful and lose 125,000 if the market is a failure. If a company will launch product 2, it will gain 75,000 if the market is successful and lose 75,000 if the market will fail. If a company decides not to launch any of the product, it will not be affected whether the market will succeed or fail. There is a 53% probability that the market will succeed and 47% probability that the market will fail. What will be the companies decision based on EMV? What is the decision of each company based on expected utility value?
Eunice, in The scenario, wants to determine how each of the 3 companies will decide on
possible new investments. He was able to determine the new investment pay off for each
of the three choices as well as the probability of the two types of market. If a company will
launch product 1, it will gain 125,000 if the market is successful and lose 125,000 if the
market is a failure. If a company will launch product 2, it will gain 75,000 if the market is
successful and lose 75,000 if the market will fail. If a company decides not to launch any
of the product, it will not be affected whether the market will succeed or fail. There is a
53% probability that the market will succeed and 47% probability that the market will fail.
What will be the companies decision based on EMV? What is the decision of each
company based on expected utility value?
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