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Hi John!
I actually confused with example 2( decision tree) in the notes.
From your lectures, I do have understood that the market research will tell us that whether we will have a good or bad result, and thus leaving us with 3 decisions in each case.
However, you’ve also said that for example, if the market research told us we will get a good result, and if we choose to do the expensive ref, it may end up being good or poor.
I am confused here. If we do market research, and they told us it’s good, then why if we choose exp ref, we may end up with a good or poor result? If they told us it’s good, how can we have the risk of it being good or bad at the end.
If we they told us it’s good and if we choose exp ref, and we end up with a situation where this exp ref can be good or bad, then what’s the point of the market research?Thanks.
Have you read the question carefully?
The question says that the market research is not perfect and that even if it says that there will be a good result, then there is still a chance that it is wrong and that it is a bad result.
That is what happens in real life! There is no such thing in real life as perfect market research. However, (if you read the question carefully), if you do have market research and it says the result is good, then it is much more likely that the actual result will turn out to be good.
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