Exercise 1 

1) In this exercise, we are talking about a job which is a long-term decision, it will not be
repetitive. There are large fluculations and big variations between the alternatives. Thus, the
expected value criterion isn’t appropriate.
2) We have 3 offers :
 Alternative1 : Team leader at a reputed company
 Alternative2 : Developer at a nely established foreign company.
 Alternative3 : establish his own company.

States of nature : product is a breakthrough, product is a success, product is a flop.

We compute the expected value for each alternative :

 Alternative1 : 1200*12= 14400

 Alternative2 : Breakthrough+ success+ flop= ((400*12)+(3000*7))*0.4 + ((400*12)+
(1000*7))*0.4 + (400*12)*0.2 = 16000
 Alternative3 : 9333

The best job offer that offers the best return is the developer position.

Exercise 2 :

1) The objective of TBS team to decide on what competition to choose in order to maximize
the funding of their project.

2)

Exercise 3 :

1) The decision isn’t repititive, we don’t have significant variations in the outcome.Thus
EMV is not appropriate.
2)

10000
Inv1
22000

Inv2 14000

-10000
Inv3 3200
800

-2000