# Exercises in Decision Making (Ii)

1 Pages Posted: 23 Jun 2009 Last revised: 20 Oct 2018

See all articles by Robert L. Carraway

## Robert L. Carraway

University of Virginia - Darden School of Business

## Dana Clyman

University of Virginia (UVA), Darden School of Business (deceased)

## Jennifer Smokevitch

affiliation not provided to SSRN

### Abstract

Used in conjunction with Exercises in Decision Making (I) (UVA-QA-0607). This exercise contains four questions around which people make cognitive mistakes.

Excerpt

UVA-QA-0608

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

Carraway, Robert L. and Clyman, Dana and Smokevitch, Jennifer, Exercises in Decision Making (Ii). Darden Case No. UVA-QA-0608, Available at SSRN: https://ssrn.com/abstract=1423289