18
1.00
16
0.90
0.80
14
0.70 12 0.60 10 0.50 8 0.40 6 0.30 4
0.20
2
0.10
0
0.00 -INF - 0
0.5 - 1
1.5 - 2
2.5 - 3
3.5 - 4
4.5 - 5
5.5 - 6
Number of Grades within Range
6.5 - 7
7.5 - 8
8.5 - 9
Cumulative
Question 1
10%
50%90%
Question 2
10%
50% 90%
Question 3
10%
50%
90%
Question 4
10%
50%
90%
Question 5
10%
50% 90%
Question 6
10%
50%
90%
Question 7
10%
50% 90%
Question 8
10%
50%
90%
Question 9
10%
50%
90%
Question 10
10%
-2.00
-1.50
-1.00
-0.50
0.00
50% 90%
0.50
1.00
Score on HW Question (./1)
!" # $ %
& %
9.5 - 10
'
( " $
) )
"
$
( , ) ( ( )
$ , ,
(
($ ,
$
$$
,
" $ (
( "
(
* & ( . ) / $ (
* "
)
+ (
(
(* *'
(
"
(
$$
*
* " $
( 0 (
$
$
(
0
*
*'
(
'
" $ $
$ " (
) , (
1 ,
)
"
*
" $ "
"
)
*
$
(
!"
%$2 *
*
& %
"
0.5 Smarty Jones 14 0.3 Lion Heart
Bet Smarty Jones 2
-10 0.2 Imperialism -10 0.5 Smarty Jones -10 0.3 Lion Heart
Bet Lion Heart 2
1
2
30 0.2 Imperialism -10 0.5 Smarty Jones -10 0.3 Lion Heart
Bet Imperialism 2
-10 0.2 Imperialism 50
4)
$ 5
"
Lion Impe
'
)
$
*
Prior Smar
)
0.5 "Smar" "Lion" "Impe" 0.3 "Smar" "Lion" "Impe" 0.2 "Smar" "Lion" "Impe"
1 ,
Cond'l Prob Joint Prob 0.8 0.4 0.1 0.05 0.1 0.05 0.1 0.03 0.8 0.24 0.1 0.03 0.1 0.02 0.1 0.02 0.8 0.16
$
Pre-Posterior 0.45 Smar Lion Impe "Lion" 0.31 Smar Lion Impe "Impe" 0.24 Smar Lion Impe "Smar"
(
!" 3 $ %
2 *
Posterior Joint Prob 0.889 0.4 0.067 0.03 0.044 0.02 0.161 0.05 0.774 0.24 0.065 0.02 0.208 0.05 0.125 0.03 0.667 0.16
*
& %
0.889 Smarty Jones 4 0.067 Lion Heart
Bet Smarty Jones 1.333333
-20 0.044 Imperialism -20 0.889 Smarty Jones -20
0.45 "Smarty Jones" 1.333333
1
0.067 Lion Heart
Bet Lion Heart -17.3333
20 0.044 Imperialism -20 0.889 Smarty Jones -20 0.067 Lion Heart
Bet Imperialism -17.3333
-20 0.044 Imperialism 40 0.161 Smarty Jones 4 0.774 Lion Heart
Bet Smarty Jones -16.129
-20 0.065 Imperialism -20 0.161 Smarty Jones -20
0.31 "Lion Heart" 8.8
10.96774
2
0.774 Lion Heart
Bet Lion Heart 10.96774
20 0.065 Imperialism -20 0.161 Smarty Jones -20 0.774 Lion Heart
Bet Imperialism -16.129
-20 0.065 Imperialism 40 0.208 Smarty Jones 4 0.125 Lion Heart
Bet Smarty Jones -15
-20 0.667 Imperialism -20 0.208 Smarty Jones -20
0.24 "Imperialism" 20
3
0.125 Lion Heart
Bet Lion Heart -15
20 0.667 Imperialism -20 0.208 Smarty Jones -20 0.125 Lion Heart
Bet Imperialism 20
-20 0.667 Imperialism
!"
%$40
& %
6 '
, $ 7 8 9 # : 36 ;# 1 , $
(
62 *3 *
0.5 Smarty Jones 0.785202 Bet Smarty Jones
$
u-Value 14 0.785202
0.3 Lion Heart
-0.6074
-2
-10
-2
-2
-10
-2
-2
-10
-2
0.2 Imperialism
0.5 Smarty Jones
0.3 Lion Heart
Bet Lion Heart 1 -0.6074 -4.32015
-1.11111
0.962963
30 0.962963
0.2 Imperialism -2
-10
-2
-2
-10
-2
-2
-10
-2
0.5 Smarty Jones
0.3 Lion Heart
Bet Imperialism -1.40082
0.2 Imperialism 0.995885
' ( (, $$
1 , ) )
$
( "
> "
$
$ (
50 0.995885
62<*<=* ' $ " " ,
*
!"
%$& %
$ *
0.889 Smarty Jones $ 0.355606 Bet Smarty Jones
u-Value 4 0.355606
0.067 Lion Heart
-0.57279
-8
-20
-8
-8
-20
-8
-8
-20
-8
0.044 Imperialism
0.889 Smarty Jones
0.45 "Smarty Jones" -0.57279
1
Bet Lion Heart
0.067 Lion Heart
-7.40741
0.888889
20 0.888889
0.044 Imperialism -8
-20
-8
-8
-20
-8
-8
-20
-8
0.889 Smarty Jones
Bet Imperialism
0.067 Lion Heart
-7.60055 0.044 Imperialism
0.987654
40 0.987654
0.161 Smarty Jones 0.355606 Bet Smarty Jones
4 0.355606
0.774 Lion Heart
-6.65232
-8
-20
-8
-8
-20
-8
-8
-20
-8
0.065 Imperialism
0.161 Smarty Jones
0.31 "Lion Heart" -1.0864 -6.69426
-1.11828
2
Bet Lion Heart
0.774 Lion Heart
-1.11828
0.888889
20 0.888889
0.065 Imperialism -8
-20
-8
-8
-20
-8
-8
-20
-8
0.161 Smarty Jones
Bet Imperialism
0.774 Lion Heart
-7.42015 0.065 Imperialism
0.987654
40 0.987654
0.208 Smarty Jones 0.355606 Bet Smarty Jones
4 0.355606
0.125 Lion Heart
-6.25925
-8
-20
-8
-8
-20
-8
-8
-20
-8
0.667 Imperialism
0.208 Smarty Jones
0.24 "Imperialism" -2.00823
3
Bet Lion Heart
0.125 Lion Heart
-6.88889
0.888889
20 0.888889
0.667 Imperialism -8
-20
-8
-8
-20
-8
-8
-20
-8
0.208 Smarty Jones
Bet Imperialism
0.125 Lion Heart
-2.00823 0.667 Imperialism
!" < $ %
0.987654
40 0.987654
& %
!
" '
1 , " * @
,
( " ( , p 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
,
" )
"
(
1 .$ )) / ) 1 , $+
) " ?#
#
( (
, " ( "(
$ $ " * '
Sensitivity to p for Risk Neutral Case
CE 6.6 6.54 6.48 6.42 6.36 6.3 6.24 6.18 6.12 6.06 6
4
$
CE
$
,
6.7 6.6 6.5 6.4 6.3 6.2 6.1 6 5.9 0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
p
$ $
" $
( ,
$* '
1 , , A B (
,
$ 9*
# " , ?# p 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
( $
, $ 7 8 9 # : 36 ;# ) 1 , , , $ ( , " , $ .$ )) /)
CE -7.18709 -7.82247 -8.36703 -8.79941 -9.08972 -9.19426 -9.04544 -8.53039 -7.43855 -5.30113 -0.64981
$
$ 1 "
) " *
" )
$
Sensitivity Analysis to p for Risk Averse Case 0 -2
CE
6
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
-4 -6 -8 -10 p
!" % $ %
& %
0.8
0.9
1
'
1 , (
( (
C
" , :
9# ( 1
$
( (
" 5 6,
* ,
1 , $> $ 9#*
( ( (,
)
$ *<3 7
, ( ) " 36% $ $ ( $ ", , $ $ ( " * 7& ) 6, 36#3 $ *8
!"
%$$
" (,
* ) , 1 , $62 *3 , " $$ ) "
( 8* ' $
6,
( $
"
$
& %
$
) *
( ) )"
0.79 S Outdoor
100 0
$49.80 0.67
$85.00 0.92
0.21
$85.00
R -$15.00 0 0.79
-$15.00 -0.31
S
0.43
$75.00
"S"
Porch 0
$53.70 0.70
2
90 0
$53.70 0.70
$75.00 0.86
0.209302326 R
$5.00 20
$5.00 0.09
0.79 S
$25.00 Indoor
40 0
$26.98 0.42
$25.00 0.39
0.209302326 R
$35.00
50
$35.00 0.51
0.11
$41.74 0.59
S $85.00 100 0
-$9.08 -0.18
$85.00 0.92
0.89 R
-$15.00 0 0.11
-$15.00 -0.31
S
0.57
$75.00
"R"
Decision 13
90
3 0
$33.88 0.50
0
$9.87 0.17
$75.00 0.86
0.89 R
$5.00 20
$5.00 0.09
0.11 S
$25.00 Decision 14
40 0
$33.88 0.50
$25.00 0.39
0.89 R
$35.00 50
%
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,
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0.5
0.4
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0.2 0.2
0.5 “i0” i1
0.1
0.6
“i1”
0.06 0.54
0.9
4 )) "
+ i0 “i0”
0.77
0.26
i1
0.2 0.06
0.23 i0 “i1”
0.27
0.74
i1
0.2 0.54
0.73
&
)
(, K9 *%%
$ I J K9 *
,
, I J.#/ K9 * %* ' , - ( (
$( $
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$
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,
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$ :4 ( " ) ) , E 0 5 ) , $ , .#/L $ )
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$
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"
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)
$
( "
" E 0 5 $ * I J. / KS *%
$
+
“i0” i0
p
0.4
“i1”
0.4p 0.4(1-p)
1-p “i0” i1
1-p
0.6
“i1”
0.6(1-p) 0.6p
p
4 )) "
+ i0
0.4p
“i0”
0.4p / (0.6 - 0.2p)
0.6 - 0.2p
i1
0.6(1-p)
0.6(1-p)/ (0.6 - 0.2p) i0
0.4(1-p)
“i1”
0.4(1-p) / (0.4 + 0.2p)
0.4 + 0.2p
i1
0.6p
0.6p / (0.4 + 0.2p)
&
(
$
,
(
( " $ ( ( $ I J.#/ KT *#*
$) S * 0 , $)S *
>
•
, "I J. / K9 *% + 0.4p / (0.6 - 0.2p) = 0.75 => p 0.82;
•
, "I J.#/ K9 *#+ 0.4(1-p) / (0.4 + 0.2p) = 0.1 => p 0.86;
' $ )) A
,
$) S * , $
F* , - ,
,
(
0 , " . /(
$ E 0 0
*
.
!" #
%$& %
( *4 $
( (
(
$
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($
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($ $
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, $$ ( 2 *
$
$
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/ : ( "
$ ,
"
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(
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: (
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, 0 ( "
$
$ "
(
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$ ) +
)
A ) $( " , $ ) ,
", $
) , (
"
+ High Superlight **
-65
0.3
-200
0.5 Medium
-20
0.2
25
-65 Low
-125 Basic
1 ,
1
( 62< *
)
! " #3 $ %
)
"
& %
*
"+ Superlights -200 High
-125 0.3 ** Basic Superlights **
-42.5
0.5 Medium
-125 -20
-20 -125 Basic Superlights **
0.2
25
25
Low -125 Basic
, ( , 1 7−2 * 8 − 7−2< 8 = 2 +
$ , − 2< * C* , )
−2 $
1 , $
>
$
,
*
, (
1 , *
0.0 0
0.2
0.4
0.6
0.8
1
-50.0
)
"
-100.0
-
-150.0
-200.0
-250.0
'
")
)
≈ *<#*
!" #
%$(
& %
,
+
)
$
GP>*
50 45 40 35 30 25 20 15 10 5 0 0
'
0.2
0.4
0.6
0.8
≈ *<#*
A ) ,
1
(
)
)
U
+ 4 ( ) )
0 *
)
0
",
)
Pass 0.3
0.3 High 0.7 No pass Pass 0.5 0.8 Medium 0.2 No pass Pass 0.2 0.9 Low 0.1 No pass
'
( ) "
High 0.09 0.21
0.13 0.60 0.67 Medium 0.27 Low High 0.64 0.33 0.30 No pass Medium 0.06 Low Pass
0.4 0.1 0.18 0.02
()
*
!" #
%$& %
0.09 0.4 0.18 0.21 0.1 0.02
High Superlights ** Pass
-32.09
0.13
-200
0.60 Medium
-20
0.27
25
-32.09 0.67
Low -125 Basic
-62.75
High Superlights 0.33 No pass
-131.82
0.64
-200
0.30 Medium
-20
0.06
25
-125 Low ** Basic
'
,
( GP 1
-125
$ 1 − 2 < *% 7−2< *% 8 − 7−2< 8 = 2 * "
+
( (
,
(
$
($
)
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) " -
2
) )
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(
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($
"
$
*
!" #
%$)
& %
Sun
Rain
"Sun" p 0.4 1-p "Rain" "Sun" 0.6 1-p p "Rain"
Sun "Sun" 0.4p / (0.6 - 0.2p) 0.6 - 0.2p Rain Sun 0.4 + 0.2p 0.4(1-p) / (0.4 + 0.2p) "Rain" Rain
0.4p 0.4(1-p) 0.6(1-p) 0.6p
"Sun" 0.6 - 0.2p
Outdoors
Sun 0.4p / (0.6 - 0.2p)
Porch
Rain Sun 0.4p / (0.6 - 0.2p)
0.4p 0.6(1-p) 0.4(1-p) 0.6p
Rain Sun 0.4p / (0.6 - 0.2p) Indoors Outdoors
0.4 + 0.2p "Rain"
Rain Sun 0.4(1-p) / (0.4 + 0.2p) Rain Sun 0.4(1-p) / (0.4 + 0.2p)
Porch Rain Sun 0.4(1-p) / (0.4 + 0.2p) Indoors
100 0
1.00 0.00
90 20
0.95 0.32
40 50
0.57 0.67
100 0
1.00 0.00
90 20
0.95 0.32
40 50
0.57 0.67
Rain
W
0 $
(
) $ , ) $
H
0 0 ( )L$ )
* (, A ) *
! " #= $ %
(
$$ 0 (
5
& %
@
( $
) "
$$
, "
$
$ ) (*
$"
,
$
25 Value of Information
20 15 10 5 0 0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Accuracy
( , $ ,
$$ + 3F
" #%F* @
, (
$ $
1
2# (
( $$ ( " H
" *
C
! + ' E)
(
( E
) C , 4 $ E) *
7>> $ $ " ( "
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+ 4
0 0
%$&& 8 , ;")
*
& %
$ ;
,
E)
E)
>> &&
2
E 4
@
, $
" $ E &
"
"
"
"
$
(
. $
$
L$ / B ) )
1
)
( 1 )
( L$ A ) $ " " $C 4 *
$
(
( 4
)
( 4* ' (
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'
)
0
) ) ( " ( 5
4
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E "
(
4 ,
$
A ) ( $ L
.$
( (
$
* )
(
/ 0 $C "
" ( " E) * " $
*
"+ 4
$C 0 ,
(
5 )(
0
* 6
$
(
6) )
,
−
7 8 = #− ρ ( ρ C ) ( ) *
5
0
*4 *4 $ ρ = 2=%* 3 C &
(
!" # $ %
( ρ = 2 # *# C ρ = 2# C $
& %
0 $ $
Driver 0.1 $ 62.03 0.46 Bay Area 0.3
CCI **
62.03
0.462
0.22
$ 42.00
0.34
New Client 0.4 $ 53.00 0.6 $ 32.00
0.41 0.27
0.34 0.5 San Francisco
$
$ 25.00 San Jose 0.5
0.6
0.33
0.57
Japan
Senior 0.85 $ 95.00 0.15 $ 35.00 Associate
0.61 0.30
$ 60.00
0.45
WWS
" ( + 4 C
$$ $
, ( "
(
&& *
>> *
(
,
$$
2< * 3C
$
+ ,
$>
0
$
$70
(
, *
>>
Ce rta in Equiva le nt
$60
&&
$50 $40 $30 $20 $10 $0
200
400
600
800
1000
1200
Risk Tole ra nce
' + @ (C $ *
, 7
(
8
))
(
0 "
"
( "
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$
%$ρ ≈ 2< C*
( ( "*
)
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&
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>> &&
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2
E 4
'
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(
,
$
4
( 4
,
*
Driver 1 $ 25.00 0.22 Bay Area
CCI
0
0.34 0.5 San Francisco
"Driver"
$ 25.00
0.22
$ 42.00
0.34
New Client 0.33 0.4 $ 53.00 0.6 $ 32.00
0.41 0.27
San Jose 0.5
0.451 0.1
Japan
0
0.57
** WWS
Senior 0.85 $ 95.00 0.15 $ 35.00 Associate
0.61 0.30
$ 60.00
0.45
$ 25.00
0.22
$ 42.00
0.34
New Client 0.4 $ 53.00 0.6 $ 32.00
0.41 0.27
Driver 0 $ 40.93 0.34 Bay Area
CCI
0.34
San Jose 0.5
1 0.5 San Francisco $
73.36
0.519815 "Bay Area"
0.3
0.451
0
0.33
Senior 0.85 $ 95.00 0.15 $ 35.00 Associate
0.61 0.30
$ 60.00
0.45
$ 25.00
0.22
$ 42.00
0.34
New Client 0.33 0.4 $ 53.00 0.6 $ 32.00
0.41 0.27
0.57
Japan VOC =
11.33
** WWS Driver
San Jose 0.5
$ 83.37 0.57 Bay Area
CCI **
0.6
0 0.34 0
0.5 San Francisco
0.566
"Japan"
Japan
1
0.57
Senior 0.85 $ 95.00 0.15 $ 35.00 Associate
0.61 0.30
$ 60.00
0.45
WWS
!" 3 $ %
& %
Driver 0.1 $ 62.43 0.46 Bay Area 0.3
CCI **
0.34 0 San Francisco
"San Jose"
$ 25.00
0.22
$ 42.00
0.34
New Client 0.33 0.4 $ 53.00 0.6 $ 32.00
0.41 0.27
San Jose 1
0.464 0.5
Japan
0.6
0.57
Senior 0.85 $ 95.00 0.15 $ 35.00 Associate
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0.33
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CCI **
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0.41 0.27
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0.4849
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0.451
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