You sign up for a cell phone plan and are presented with this chart showing how your
Chapter 0, Problem 19(choose chapter or problem)
You sign up for a cell phone plan and are presented with this chart showing how your plan automatically adjusts to the minutes you use each month. For example: If you select Option 1 and you use 700 minutes the first month, youll only pay $79.99. If your usage then goes down to 200 minutes the second month, youll only pay $29.99. You guess your monthly usage will be 100, 300, 500, or 700 anytime minutes. Assume the probabilities for each event are the same. Option 1 Starting at $29.99 per Month Anytime Minutes Cost 0200 $29.99 201700 $5 for each 50 minutes Above 700 Additional anytime minutes only 10 each Option 2 Starting at $34.99 per Month Anytime Minutes Cost 0400 $34.99 401900 $5 for each 50 minutes Above 900 Additional anytime minutes only 10 each Option 3 Starting at $59.99 per Month Anytime Minutes Cost 01,000 $59.99 1,0011,500 $5 for each 50 minutes Above 1,500 Additional anytime minutes only 10 each a. Create a payoff (cost) table for this decision. b. Using the expected monetary value principle, which decision would you suggest? c. Using the optimistic (maximax cost) approach, which decision would you suggest? d. Using the pessimistic (maximin cost) strategy, which decision would you suggest? e. Work out an opportunity loss table for this decision. f. Using the minimax regret strategy, which choice would you suggest? g. What is the expected value of perfect information?
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