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

Tips and Deals Forums Home Insurance Decision Analysis #1: Flood insurance in a certain area costs $3000 per year.?

This topic contains 0 replies, has 1 voice, and was last updated by  Anonymous 8 years, 1 month ago.

  • Author
    Posts
  • #363440

    Anonymous

    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?

You must be logged in to reply to this topic.

Register New Account
Reset Password