9781118041581

508 Chapter 12 Decision Making under Uncertainty

$76

.2

$69

.5

$55

.3

$76

.2

$69

.5

$55

.3

$76

.2

$69

.5

$55

.3

D

E

F

700

2,460

350

150

1,180

620

300

1,340

700

8,000 barrels

16,000 barrels

5,000 barrels

.15

.55

.3

$76

.2

$69

.5

$55

.3

$76

.2

$69

.5

$55

.3

$76

.2

$69

.5

$55

.3

G

H

I

400

1,940

50

–150

820

260

–60

820

180

8,000 barrels

16,000 barrels

5,000 barrels

.28

.48

.24

Oil at 5,000 feet

Oil at 3,000 feet

.13

.21

–400

No oil

.66

Drill

A

B

C

1,372

636

360

815.4

852

276

60

353.8

–83.7

FIGURE 12.2

A More Complicated Drilling Decision

This decision tree contains multiple risks that generate 19 possible outcomes.

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