The physicians in previous problem have been approached by a market research firm that offers to...

The physicians in previous problem have been approached by a market research firm that offers to perform a study of the market at a fee of $5,000. The market researchers claim their experience enables them to use Bayes’ theorem to make the following statements of probability:

probability of a favorable market given a favorable study -----0.82 probability of an unfavorable market given a favorable study 0.18 probability of a favorable market given an unfavorable study 0.11 probability of an unfavorable market given an unfavorable

study-- 0.89 probability of a favorable research study ----------0.55 probability of an unfavorable research study----------------------0.45

a) Develop a new decision tree for the medical professionals to reflect the options now open with the market study.

b) Use the EMV approach to recommend a strategy.
c) What is the expected value of sample information? How much might the

physicians be willing to pay for a market study?
d) Calculate the efficiency of this sample information.

Expert Solution

thsnk you

orchestra answered 1 year ago

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