EU(overr16) = 0.70 U(10000.00) + 0.05 U(13000.00) + 0.15 U(16000.00) + 0.05 U(40000.00) + 0.05 U(70000.00) = 0.70 100267.30 + 0.05 102073.33 + 0.15 103878.07 + 0.05 118272.07 + 0.05 136165.85 = 70187.11 + 5103.67 + 15581.71 + 5913.60 + 6808.29 = 103594.38. EU of override 16 if U is normalized at 100,000 and 900,000, as in Winkler (1972), is 0.12. CE of override 1/16 = U1(EU(overr16)) = EU(overr16)1/r 150000 = 103594.381.04 150000 = 15528.28. ANALYSIS OF NO DRILLING EU of not drilling = 94237.49. EU of nodrill if U is normalized at 100,000 and 900,000, as in Winkler (1972), is 0.11.
EU(overr16) = 0.70 U(10000.00) + 0.05 U(13000.00) + 0.15 U(16000.00) + 0.05 U(40000.00) + 0.05 U(70000.00) = 0.70 100267.30 + 0.05 102073.33 + 0.15 103878.07 + 0.05 118272.07 + 0.05 136165.85 = 70187.11 + 5103.67 + 15581.71 + 5913.60 + 6808.29 = 103594.38. EU of override 16 if U is normalized at 100,000 and 900,000, as in Winkler (1972), is 0.12. CE of override 1/16 = U1(EU(overr16)) = EU(overr16)1/r 150000 = 103594.381.04 150000 = 15528.28. ANALYSIS OF NO DRILLING EU of not drilling = 94237.49. EU of nodrill if U is normalized at 100,000 and 900,000, as in Winkler (1972), is 0.11.
pt_extra_exercises_solutions.docx