Decision support systems C/W - Research Proposal Example

If EMV maximisation strategy is used, this option will be chosen. i) The major change would be increase of the probability of an accident and corresponding decrease of the probability there would be no accident. Also, the average medical expenses in case of an accident may go up as well. The cost of different policies is likely to remain the same. ii) As result of increased probability of accident the expected monetary outcomes for the options A, B and no policy purchase will go down. The expected monetary outcome for policy C will remain the same -30.

Purchasing no insurance policy would not be wise in this case. The choice between policies should be made taking into account new probability of an accident. If risk-aversion strategy is used, the optimal variant would be the same as previously (policy C).