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- The document describes a scenario where you are a contestant on the game show "Who Wants To Be A Millionaire" after correctly answering the $250,000 question - You have the option to stop and take home $250,000, or attempt the $500,000 question - If you get the $500,000 question right, you can stop and take $500,000 or try for $1,000,000 - Getting either higher question wrong means you only take home $32,000 - You have one "phone a friend" lifeline remaining that can be used on the $500,000 or $1,000,000 question - The optimal strategy identified is to

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163 views3 pages

Ex Midterm

- The document describes a scenario where you are a contestant on the game show "Who Wants To Be A Millionaire" after correctly answering the $250,000 question - You have the option to stop and take home $250,000, or attempt the $500,000 question - If you get the $500,000 question right, you can stop and take $500,000 or try for $1,000,000 - Getting either higher question wrong means you only take home $32,000 - You have one "phone a friend" lifeline remaining that can be used on the $500,000 or $1,000,000 question - The optimal strategy identified is to

Uploaded by

kenkoro
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Tên: Huỳnh Kim Thanh Tuyền

Midterm BA: DECISION ANALYSIS

Use QM for windows to construct and solve a decision tree to decide what to do. What is the best
course of action, assuming your goal is to maximize your expected winnings?

Question:
You are a contestant on “Who Wants to Be a Millionaire?” You already have answered the
$250,000 question correctly and now must decide if you would like to answer the $500,000
question.

You can choose to walk away at this point with $250,000 in winnings or you may decide to
answer the $500,000 question. If you answer the $500,000 question correctly, you can then
choose to walk away with $500,000 in winnings or go on and try to answer the $1,000,000
question. If you answer the $1,000,000 question correctly, the game is over and you win
$1,000,000. If you answer either the $500,000 or the $1,000,000 question incorrectly, the game
is over immediately and you take home “only” $32,000. A feature of the game “Who Wants to
Be a Millionaire?” is that you have three “lifelines”—namely “50–50,” “ask the audience,” and
“phone a friend.” At this point (after answering the $250,000 question), you already have used
two of these lifelines, but you have the “phone a friend” lifeline remaining. With this option, you
may phone a friend to obtain advice on the correct answer to a question before giving your
answer. You may use this option only once (i.e., you can use it on either the $500,000 question
or the $1,000,000 question, but not both). Since some of your friends are smarter than you are,
“phone a friend” significantly improves your odds for answering a question correctly. Without
“phone a friend,” if you choose to answer the $500,000 question you have a 65 percent chance of
answering correctly, and if you choose to answer the $1,000,000 question you have a 50 percent
chance of answering correctly (the questions get progressively more difficult). With “phone a
friend,” you have an 80 percent chance of answering the $500,000 question correctly and a 65
percent chance of answering the $1,000,000 question correctly.

You are a contestant on “Who Wants to Be a Millionaire?” You already have answered the
$250,000 question correctly and now must decide if you would like to answer the $500,000
question.

You can choose to walk away at this point with $250,000 in winnings or you may decide to
answer the $500,000 question. If you answer the $500,000 question correctly, you can then
choose to walk away with $500,000 in winnings or go on and try to answer the $1,000,000
question. If you answer the $1,000,000 question correctly, the game is over and you win
$1,000,000. If you answer either the $500,000 or the $1,000,000 question incorrectly, the game
is over immediately and you take home “only” $32,000. A feature of the game “Who Wants to
Be a Millionaire?” is that you have three “lifelines”—namely “50–50,” “ask the audience,” and
“phone a friend.” At this point (after answering the $250,000 question), you already have used
two of these lifelines, but you have the “phone a friend” lifeline remaining. With this option, you
may phone a friend to obtain advice on the correct answer to a question before giving your
answer. You may use this option only once (i.e., you can use it on either the $500,000 question
or the $1,000,000 question, but not both). Since some of your friends are smarter than you are,
“phone a friend” significantly improves your odds for answering a question correctly. Without
“phone a friend,” if you choose to answer the $500,000 question you have a 65 percent chance of
answering correctly, and if you choose to answer the $1,000,000 question you have a 50 percent
chance of answering correctly (the questions get progressively more difficult). With “phone a
friend,” you have an 80 percent chance of answering the $500,000 question correctly and a 65
percent chance of answering the $1,000,000 question correctly.

Enter data into QM for Window:

The Decision Tree shows the best route to win to win maximize money on “Who Wants to Be a
Millionaire?”: Contestant should answer the $500,000 question without “phone a friend” option
and use this option for answer the $1,000,000 question. Final round, contestant has 65% to
answer the $1,000,000 question correctly. Therefore, to be a millionaire, not just smart, it is
about planning and making decision.

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