A medical doctor is involved in a 1 million malpractice suit. He can either settle out of court for 250,000 or go to court. If he goes to court and loses, he must pay 825,000 plus 175,000 in court costs. If he wins in court the plaintiffs pay the court costs. Identify the outcomes of this decision-making problem.
A) Two choices: (1 ) go to court and (2 ) settle out of court.
B) Two possibilities: (1 ) win the case in court and (2 ) lose the case in court.
C) Four consequences resulting from Go/Settle and Win/Lose combinations.
D) The amount of money paid by the doctor.
Q. 2A medical doctor is involved in a 1 million malpractice suit. He can either settle out of court for 250,000 or go to court. If he goes to court and loses, he must pay 825,000 plus 175,000 in court costs. If he wins in court the plaintiffs pay the court costs. Identify the states of nature of this decision-making problem.
A) Two choices: (1 ) go to court and (2 ) settle out of court.
B) Two possibilities: (1 ) win the case in court and (2 ) lose the case in court.
C) Four consequences resulting from Go/Settle and Win/Lose combinations.
D) The amount of money paid by the doctor.
Q. 3A medical doctor is involved in a 1 million malpractice suit. He can either settle out of court for 250,000 or go to court. If he goes to court and loses, he must pay 825,000 plus 175,000 in court costs. If he wins in court the plaintiffs pay the court costs. Identify the actions of this decision-making problem.
A) Two choices: (1 ) go to court and (2 ) settle out of court.
B) Two possibilities: (1 ) win the case in court and (2 ) lose the case in court.
C) Four consequences resulting from Go/Settle and Win/Lose combinations.
D) The amount of money paid by the doctor.
Q. 4The difference between expected payoff under certainty and expected value of the best act without certainty is the
A) expected net present value. B) expected value of perfect information.
C) expected rate of return. D) expected monetary value.
Q. 5A tabular presentation that shows the outcome for each decision alternative under the various states of nature is called
A) a payback period matrix. B) a payoff table.
C) a decision matrix. D) a decision tree.
Quick Reply
