Question: Tracy's Exploding Offer: Answer Sheet

1. (7 points)
   
   If Tracy wants to maximize the expected value of her initial salary, what should she do (Explain)?
   Attach your decision tree here, labeled as Exhibit 1a.
2. (3 points)
   
   How much does the expiration date on the offer from Company B cost her (in terms of initial salary) ?
   
   In other words, what is the most she should be willing to give up in initial salary to extend the deadline on the offer from Company B until after she hears from Company C ?
   Attach the work you did to support this answer here, labeled as Exhibit 1b.
3. (4 points)
   How much would it be worth (in terms of initial salary) to know now whether or not the Company B position will still be available in two weeks?
   
   (i.e. what is EVPI of this uncertainty?)
   Attach the work you did to support this answer here, labeled as Exhibit 1c.
4. 
   (6 points)

1. What are the information probabilities - Bayes?
   (i.e. P("prospects are good") and P("prospects are bad")
   
   P("prospects are good") _______________________
   
   P("prospects are bad") ________________________
   
2. What is EVSI (Expected Value of Sample Information) for this inside information?

What is EVSI for this inside formation?_____________________________

Attach your decision tree here, labeled as Exhibit 1d .

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Solution: The downloadable solution consists of 8 pages
Deliverable: Word Document