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project that involves replacing the lighting fixtures

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Fred plans a major home improvement project that involves replacing the lighting fixtures in his living room. He is considering two kinds of fixtures, Model I and Model II. The work involved in installing the fixtures depends on the kind of wiring in the living room, and without tearing into the sheet rock this is unknown.;If the wiring is Type A, installing Model I fixtures is a 4 hour job, but if the wiring is Type B it will take 20 hours.;If the wiring is Type A, then Model II fixtures will take 16 hours, and if the wiring is Type B it will take 10 hours.;Obviously, Model I is best if it's Type A wiring, and Model II is best for Type B wiring. Fred thinks it equally likely that the wiring is of either type (i.e., both probabilities are 50%).;By drilling holes in the sheet rock and then repairing them, Fred figures he can do an inspection of the wiring and determine exactly what kind it is. If it's Type A he'll go with Model I, and otherwise he'll go with Model II. However, such a thorough check will take 4 hours.;He says to is wife, "It will take 4 hours to settle the issue. It's not worth it. I can get the whole job done in that time if it's Type A wiring. I'll go with Model I now and hope for the best".;(a) [This part should be fairly easy] Assume that time taken to complete the job is Fred's only concern - all other factors are equal. I.e., Fred's utility is directly proportional to the negative of time (less time equals more utility). Draw a decision tree, then calculating expected values to check on the soundness of Fred's reasoning.;(b) [This part will be harder] Fred's wife Freda, who happens to be an electrician, suggests a compromise. "I can do a quick check of the wiring without drilling any holes. It will only take me 2 hours. There's an 80% chance I'll get it right, i.e., a 20% chance I'll get it wrong, but at least you can then make a more informed guess.;As he always does, Fred went along with his wife's suggestion. Was he right to do so? (Again, assume time is the only issue, and that pleasing his wife does not count);-------------------;Additional Requirements;Min Pages: 1;Level of Detail: Show all work;Other Requirements: PSYC 433 - Behavioral Decision Theory

 

Paper#24170 | Written in 18-Jul-2015

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