Question

Problem 3. Dwight Moody is the manager of a large farm with 1,000 acres of arable land. For greater efficiency, Dwight always devotes the farm to growing one crop at a time. He now need:s to make a decision on which one of four crops to grow during the upcoming growing season. For each of these crops, Dwight has obtained the estimates of crop yields and net incomes per bushel under various weather conditions. After referring to historical meteorological records, Dwight also estimated the probabilities for the weather during the growing season: Expected Yield, Bushels per acre Weather Crop 1 Crop 2 Crop 3 Crop 4 Probability Dry Moderate 50 Wet 20 40 20 30 20 40 35 30 45 15 0.47 0.06 0.47 15 Which crop should Dwight grow according to (a) maximin criterion (b) expected payoff criterion (c) minimax regret criterion (d) what is Dwight's EVPI in this case?

Answer 1