Oyster Oil

This case follows Angela, Head of Exploration at Oyster Oil, as she decides whether to drill in the high-risk Bueno Field. Despite a large potential payoff, the probability of finding oil is only about 5%, making drilling unattractive without additional information. The case highlights a common mistake: confusing the reliability of a test with the actual likelihood of success. Using intuitive methods, it shows how imperfect data slightly improves decisions but has limited value unless it changes the final choice, emphasizing the importance of base rates and rational updating.