What decision should be made according to the expected monetary value decision rule?[Fill in the blank]

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BlackTom AI · Accepted Answer

The question asks which decision should be made according to the expected monetary value decision rule, with four labeled options: a. A, b. B, c. C, d. D.
First, consider what the expected monetary value (EMV) rule entails: EMV compares the probabilistic monetary outcomes of each decision option and selects the option with the highest expected value, typically computed as the sum of each outcome's value times its probability.
Option a (A): If A does not yield the highest EMV relative to the others, then choosing A would not maximize expected monetary payoff. Verify whether A’s outcomes, weighted by their probabilities, are inferior to another option.
Option b (B): Similarly, B must be weighed by its EMV. If B’s calculated EMV is lower than some other option’s EMV, then it should not be chosen under the EMV criterion.
Option c (C): This option is the one selected by the EMV rule when its calculated EMV is greater than the EMVs of A, B, and D. If the data show C has the largest probabilistic monetary payoff, then C is the correct choice under EMV.
Option d (D): If D’s EMV is not the maximum, then D would not be the optimal decision under the EMV criterion. Consider whether D’s outcomes, when weighted by their probabilities, fall short of the top EMV.
In summary, the EMV principle leads to picking the option with the highest expected monetary value. If the provided answer key marks C as the correct choice, that implies C has the greatest EMV among A, B, C, and D. Conversely, A, B, and D would be incorrect if their EMVs are lower than C’s. The core behavior to focus on is the comparison of EMVs across all options, not the absolute values in isolation.

What decision should be made according to the expected monetary value decision rule?[Fill in the blank]

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