Example (continued)
Values are normalised by setting where n = 4 is the number of points in the sequence
The resulting value function is illustrated on the next slide
The slide shows that the smaller the number of weekly working hours the larger decrease is required to produce the same increase in value for the DM.
The linear approximation of the value function is rather crude, because only four points were used. To get a better approximation, more points would be needed.
Value measurement techniques: Difference standard sequence