Decision tree with utility

A question is this type if and only if it asks to use expected utility rather than EMV as the decision criterion, applying a given utility function to outcomes.

1 questions · Standard +0.3

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Edexcel FD2 2020 June Q2
7 marks Standard +0.3
2. Jenny can choose one of three options, A, B or C, when playing a game. The profit, in pounds, associated with each outcome and their corresponding probabilities are shown on the decision tree in Figure 1. \begin{figure}[h]
\includegraphics[alt={},max width=\textwidth]{e0fc09f9-06ea-4528-a2de-f409112d85cc-03_947_1319_349_374} \captionsetup{labelformat=empty} \caption{Figure 1}
\end{figure}
  1. Calculate the optimal EMV to determine Jenny's best course of action. You must make your working clear. For a profit of \(\pounds x\), Jenny's utility is given by \(1 - \mathrm { e } ^ { - \frac { x } { 400 } }\)
  2. Using expected utility as the criterion for the best course of action, determine what Jenny should do now to maximise her profit. You must make your working clear.