1813 First, sensitivity analysis by hand: Let’s establish some notation for convenience: Strategy A = Accept $2 billion. Strategy B = Counteroffer $5 billion, then refuse if Texaco offers $3 billion. Strategy C = Counteroffer $5 billion, then accept if Texaco offers $3 billion. EMV (A) = 2 EMV (B) = 0.17 (5) 0.5 [p 10.3 q 5 (1-p – q) 0] 0.33 [p 10.3 q 5 (1-p – q) 0] = 0.85 8.549 p 4.15 q. EMV(C) = 0.17 (5) 0.5 [p 10.3 q 5 (1-p – q) 0] 0.33 (3) = 1.85 5.15 p 2.5 q. Now construct three inequalit
