Before you drill, you might consult a geologist who can assess the promise of the piece of land. She can tell you whether your prospects are "good" or "poor." But she is not a perfect predictor. If there is oil, the conditional probability is 0.95 that she will say prospects are good. If there is no oil, the conditional probability is 0.85 that she will say poor. Draw a decision tree that includes the "consult geologist" alternative. Be careful to calculate the appropriate probabilities to include in the decision tree. Finally, calculate the EVII for this geologist. If she charges $7,000, What should you do?
