Hooli, Inc •The Investor: An internationally known tech company based in Silicon Valley that participates in various techMarketing Research and Data Analysis projects worldwide. • The Offer: $10 million buyout • The Promise: Will provide the reach and resources to take what your team has done and push it to a global level. This is an outright purchase of Pied Piper. If you choose this offer, you and your teammates will no longer own the company. Peter Gregory • The Investor: A well known venture capitalist in Silicon Valley • The Offer: $200k for a nominal (5%) share of Pied Piper • The Promise: Will help you build your company and introduce you to the people you need to know and provide the counsel you need. Will take a small price, but the company will belong to you. Part A 1. The following is a decision matrix that represents your current understanding of your decision problem. As a group, consider and describe each of the outcomes for each of the investment plans and write them in the decision matrix presented below ISSUE: Which Investment Option is Best for Pied Piper? Algorithm is Successful Algorithm Is Unsuccessful A1. HOOLI BUYOUT A2. PETER GREGORY INVESTMENT A3. NOTHING 2. Using the skills learned in this lesson unit, compare and contrast these outcomes by constructing an ordinal utility scale. 3. Based on this information, choose the investment plan that you feel is best for Pied Piper. In complete sentences, explain which choice your group would make and your reasoning behind choosing this investment option. Part B After conducting more extensive research, your group discovers that there is a 60% chance that Pied Piper will succeed in the marketplace. You also determine the following information: Investment Plan Projected Profit if Algorithm is Successful Projected Profit if Algorithm is Unsuccessful $10 Million Hooli Buyout $10 Million Peter Gregory Investment $8 Million Do Nothing $200,000 $0 $0 1. Using the information provided in PART B, fill in the following decision matrix. Algorithm is Algorithm Is Successful (%) Unsuccessful (%) A1. HOOLI BUYOUT A2. PETER GREGORY INVESTMENT A3. NOTHING 2. Based on your completed decision matrix in Part B, calculate the Expected Monetary Value for each investment option. 3. Which investment option should you choose, based on the Expected Monetary Value calculated for Part B? Why? Part C After calculating the Expected Monetary Value for each option, your group is interested in calculating the expected utility of each option when the algorithm has a 60% chance of succeeding in the marketplace. Investment Option Projected Utility if Pied Piper is Successful Projected Utility if Pied Piper is Unsuccessful Hooli Buyout Peter Gregory Investment 20 Do Nothing 1. Using the information provided in Part C, fill in the following decision matrix. Pied Piper is Pied Piper Is Successful (%) Unsuccessful ___%) A1. HOOLI BUYOUT A2. PETER GREGORY INVESTMENT A3. NOTHING 2. Based on your completed decision matrix in Part C, calculate the Expected Utility for each investment option. 3. Which investment option should you choose, based on the Expected Utility calculated for Part C? Why? Part D Consider the calculations you performed above in Parts B & C and review our materials from this topic unit. Why would some decision theorists argue that expected utility is a more accurate way to decide problems under risks than expected monetary value?