Answer (A) is correct . The first step is to determine the expected value without perfect information by formulating a payoff matrix. For example, the expected payoff for the combination of State of Nature S1 and Decision 1 is $2.40 (10% probability ¡Á $24 outcome). The entire payoff matrix is S1 S2 S3 Total Decision 1 $?2.40 $7.00 $(2.40)= $7.00
The expected value of Decision 1 for this firm in this case is
