Part 2: Look at the different decision concepts you identified in part 1. What do you think those different concepts imply about how people make decisions?
Part 3: Do the decisions we make always need to be rational? Under what circumstances are we (decision makers) likely to make irrational choices?
In reviewing the five scenario's that were related to the unit 2 activity, I found that there was a number of different models, principles, or theories that were exemplified. I came to these conclusions after completing the reading assignments and multi-media presentations for unit 2 of the coursework. I believe that the Allais Paradox, Certainty Effect, St.Petersburgh Paradox, Prospect Theory, and Intransitivity were present in the Unit 2 activities.
I believe that activity one is an expample of Allais's Paradox. I feel this to be true because, often people put in this particular situation would decide to take the sure otucome of the first option even though the second option has expected greater value (plous, 1993, p. 84).
I believe that activity two is an example of the Certainty Effect. In this situation, people would much rather eliminate risk in decision making altogether rather than decrease risk to some extent or degree. Eighty percent of the participants stated that they would not be interested in purchasing the probabilstic insurance that was offered in this scenario (Plous, 1993, p. 99). Personally, I would not be interested in probabilistic insurance myself. I think it is a waste of time. The risk involved is just too...