Exercises in Decision Making (Ii)
1 Pages Posted: 23 Jun 2009 Last revised: 20 Oct 2018
Used in conjunction with Exercises in Decision Making (I) (UVA-QA-0607). This exercise contains four questions around which people make cognitive mistakes.
Rev. Jun. 6, 2014
Exercises in DECISION MAKING (II)
1.You are a marine-property adjuster charged with minimizing the loss of cargo on three insured barges that sank yesterday off Alaska. Each barge holds $ 200 million worth of cargo, which will be lost if not salvaged within 72 hours. Along with a local marine-salvage company, you have developed two options, both of which will cost the same:
Plan A: This plan will save the cargo of one of the three barges, worth $ 200 million.
Plan B: This plan has a one-third probability of saving the cargo on all three barges (worth $ 600 million) but has a two-thirds probability of saving none of the cargo.
Which plan would you choose? Plan A or Plan B?
2.Is the population of Fiji greater than 1.5 million people? Yes or No?
. . .
Keywords: quantitative analysis, decision making, cognitive bias
Suggested Citation: Suggested Citation