Hi stat listers. I have a problem with an exercise that I need to help to
solve. My knowledge on game theory is very limited and I would like to have
some insights about the way of solving it.
The exercises say: You are considering changing your car in order to be on
the business of informal transport of people. You have $100,000 to make the
investment. If you make the change the probability of win $300,000 is 0.35
and the probability of losing all the money is 0.65. If you don’t make the
change you stay with the initial $100,000. The luck plays before you. Draw
the game tree. What do the individual need to do if is neutral to risk?
Would the strategy change if the probability of success was 0.30 instead of
0.35? What is the probability of winning that makes the individual be
indifferent to invest or not invest?
I was thinking that the answer is 0.5, but it seems so simple for my point
of view. If somebody could help me with this, I will appreciate it.
Regards
_________________________________
Rodrigo Briceño
Consultant
Sanigest International
San José, Costa Rica
Telf. (506) 291-1200
Fax. (506) 232-0830
Cell (506) 357-4535
www.sanigest.com
Apdo. Postal 23-2015 Zapote Costa Rica
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