Bonus Question- Yash Patel N01442720.
=𝛼 × (maximum payoff for an alternative) + (1 − 𝛼) × (minimum payoff for an alternative)
Townhouses- maximum payoff=20, minimum payoff= -7
Condos- maximum payoff=12, minimum payoff= 2
Answer:
Let 𝛼= Hurwicz coefficient of realism
H (Townhouses) = 𝛼 × (20) + (1- 𝛼) × (-7)
= 20𝛼 + (1- 𝛼) × (-7)
= 27𝛼 - 7
H (Condos)
= 𝛼 × (12) + (1- 𝛼) × (2)
= 12𝛼 + (1- 𝛼) × (2)
= 10𝛼 + 2
H (Townhouses) = H (Condos)
27𝛼 – 7 = 10𝛼 + 2
27𝛼 - 10𝛼 = 2 + 7
17𝛼 = 9
𝛼 = 0.529
𝛼 × (maximum payoff for an alternative) + (1 − 𝛼) × (minimum payoff for an alternative)
Townhouses =0.529 × (20) + (0.471) × (-7)
Townhouses=7.283
Condos= 0.529 × (12) + (0.471) × (2)
Condos= 7.29