You are trying to decide between taking a Finance class or an Accounting class next semester. In Finance, you believe that you have a 10% chance of receiving an A, 30% chance for a B, 40% chance for a C and 20% chance for a D. In Accounting, you have a 60% chance for a B, 25% chance for a C, 10% chance for a D and 5% chance for a F. You are indifferent between following situations.
1) Receive A with probability 0.8 or F with probability 0.2. Receive B with probability 1.
2) Receive A with probability 0.5 or F with probability 0.5. Receive C with probability 1.
3) Receive A with probability 0.1 or F with probability 0.9. Receive D with probability 1.
a) Find the utility of each grade using the indifference probability method. (Hint: U(A)=1, U(F)=0)
b) Draw the decision tree describing the problem at hand, using the utilities as values for getting each grade c) What is the decision that you should make
Hi i am confused with the indifference part? how i am supposed to calculate the U(B) and U(C)? and help with the question??