Decision Analysis #1: Flood insurance in a certain area costs $3000 per year.?

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      Anonymous
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      Decision Analysis #1: Flood insurance in a certain area costs $ 3000 per year. The probability of a minor flood, causing $ 5000 in damage, is 7%. The probability of a moderate flood, causing $ 50000 in damage, is 2%. The probability of a major flood, causing $ 150000 in damage, is 1%.

      (a) draw the decision tree

      (b) should a homeowner in this area buy insurance?

      (c) why might homeowners make the opposite decision from what is predicted by the decision analsyis?

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