a market research firm

Question 44:

The manager of the Eris Shoe Company must decide whether or not to contract a controversial sports celebrity as its spokesperson. The new spokesperson’s value to Eris depends heavily on consumers’ perception of him. An initial decision analysis based on available data reveals that the expected monetary value of contracting the new spokesperson is $260,000. For $50,000 Eris can engage a market research firm that will help Eris learn more about how consumers might react to the celebrity. The EMV of buying this sample information (assuming it is free) for this decision is $300,000.

The tree below summarizes Eris’s decision. Based on EMV analysis, Eris’s manager should:

Hire the research firm.Not hire the research firm, but contract the new spokesperson. Not hire the research firm and not contract the new spokesperson. The answer cannot be determined from the information provided.