Expert answer:Decision Making Under Uncertainty, economics homew
Answer & Explanation:To save on gasoline expenses, Edith and Mathew agreed to carpool
together for traveling to and from work. Edith preferred to travel on
I-20 highway as it was usually the fastest, taking 25 minutes in the
absence of traffic delays. Mathew pointed out that traffic jams on the
highway can lead to long delays making the trip 45 minutes. He preferred
to travel along Shea Boulevard, which was longer (35 minutes), but
rarely had traffic jams. Edith agreed that in case of traffic jams, Shea
Boulevard was a reasonable alternative. Neither of them knows the state
of the highway ahead of time. After driving to work on the I-20 highway
for 1 month (20 workdays), they found the highway to be jammed 3 times.
Assuming that this month is a good representation of all months ahead,
should Edith and Mathew continue to use the highway for traveling to
work?
How would you conclusion change for the winter months, if bad weather
makes it likely for traffic jams on the highway to increase to 6 days
per month?
How would your conclusion change if Mathew purchased a new smart-phone
app that could show the status of the highway traffic prior to their
drive each morning, thus reducing the probability of them getting into a
jam down to only 1day per month (where on this day, the app showed no
traffic jam, but a jam developed in the meantime as they were driving
along the highway).
Guided Response:
In 300 words or more, please, provide your response to the above
discussion question. Please, show all your calculations and explain your
answers. Further, comment on how the conclusions of this problem will
change if there was no uncertainty and the highway always had traffic
jams, whereas Shea Blvd was always traffic jam free? Is this scenario
realistic and why?
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