[Step-by-Step] In a certain state lottery, a lottery ticket costs $2. In terms of the decision to purchase or not to purchase a lottery ticket, suppose
Question: In a certain state lottery, a lottery ticket costs $2. In terms of the decision to purchase or not to purchase a lottery ticket, suppose that the following payoff table applies:
| State of Nature | ||
| Decision Alternatives | Win s 1 | Loses s 2 |
| Purchase Lottery ticket, d 1 | 300,000 | -2 |
| Do not purchase lottery ticket, d 2 | 0 | 0 |
- A realistic estimate of the chance s of winning is 1 in 250,000. Use the expected value approach to recommend a decision.
- If a particular decision maker assigns an indifference probability of 0.000001 to the $0 payoff, would this individual purchase a lottery ticket? Use the expected utility to justify your answer.
Deliverable: Word Document 
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