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We have two options
Option A Option B
Weak economy +$50000 +$20000
Strong Economy +$60000 +$100000Information: 60% probability weak economy and 40% probablity strong economy
Furthur information : if there is weak economy than there is 80% probability that research is correct and if there is strong economy than 90% probablity that reserach is correct
Solution
if the actual state of economy in weak and reserach predict is right than we choose option A (50000*0.60*0.80 =24000) but if actual state of economy in weak and reserach prediction is wrong than option B (20000*0.60*0.20=2400)I just want to know why they switch into Option B if the actual prediction is wrong. The answer could be (50000*0.60*0.20) .Why they just switch into option B
Because if the research is wrong then it will tell us that the economy is strong. So we will pick B thinking that the economy will be strong, but in fact the return will only be 20,000 because the economy will actually be weak.
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