The state healthcare commission is planning to put out bids for hospital care. Key Hospital is consi Show more The state healthcare commission is planning to put out bids for hospital care. Key Hospital is considering making a bid but is unsure how much to bid.
The hospitals actuary has developed four options: bid a price per case of $1000 $800 $600 or $400. The hospital currently has a wealth level of $1000. Added profits associated with each level are provided in the accompanying table. Also provided in this table are the estimated probabilities of each of the four bids being accepted and the hospital boards utility of each wealth level. Given that the hospital is a risk averse utility-maximizing entity what bid should it make? Option B Option A No Bid Option D Option C Option Bid Price Probability of Bid Being Accepted Added Profits if Bid Accepted Wealth Level if Bid is Accepted Utility of a Given Level of Wealth A 1000 0.2 4000.00 5000.00 380 B 800.00 0.4 3000.00 4000.00 340 C 600.00 0.6 2000.00 3000.00 280 D 400.00 0.8 1000.00 2000.00 200 NO BID 1000.00 100 Show less
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The post The state healthcare commission is planning to put out bids for hospital care. Key Hospital is consi Show more The state healthcare commission is planning to put out bids for hospital care. Key Hospital is considering making a bid but is unsure how much to bid. appeared first on Geek Term Papers.
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