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Essay

Unit 2 activity

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Issue:

Business

 

Written by:

Jeffrey R

 

Date added:

January 1, 2016

 

Level:

University

 

Grade:

A

 

No of pages / words:

2 / 492

 

Was viewed:

341 times

 

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Essay content:

When do we make rational decisions? Under what circumstances are we likely to make irrational choices? 4. Do decisions even need to be rational? Why or why not? The Allais paradox is the first principle which focuses on the obvious choices conflicting with the utility theory. The risks in expected payoff, or utility are ineffective to the decision making process...
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I felt that the options with lower risk were more reasonable. Kahneman and Tversky's Prospect Theory introduced the second principle which also dealt rationalizing, but focused on individual desires to either extinguish risk or to decrease its possibility. Even though later calculations revealed that choice #2 could have yielded a larger profit, I felt more comfortable with the eliminating risk instead of lessening it (Plous, 1993)...
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General issues of this essay:
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