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

Robert L. Carraway (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/carraway.htm

Dana Clyman

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

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Jennifer Smokevitch

affiliation not provided to SSRN

No Address Available

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