The Intricacies of Decision Making

The Intricacies of Decision Making

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Institution

Introduction

Exercise 14.1

1. The large hospital will have more days in which over 60% of the babies born are boys as it handles a greater number of babies every day.
2. The second statement (b) is more likely as it encompasses what is known about Linda (being concerned about discrimination and other social issues).
3. The probability that the cab involved in the hit and run accident is blue as the witness stated was 0.12, which is (0.15×0.80). This is because the probability that a blue cab was plying the route at that time was 0.15, which multiplied by the probability that the witness could appropriately identify the car involved in the accident (0.80), would yield 0.12.
4. In decision 1, I would prefer the first option where I have a sure gain of $240. The chances that I would take home $1000 are extremely low (25%) and not worth the risk.

In decision 2, I would prefer the second option where I have a 75% chance of losing 1000 and 25% chance of losing nothing. As much as the chances of losing nothing are low, there is an extremely slight difference between $1000 and $750, which I could have lost anyway. The additional $250 is low when pitted against preventing the loss the entire amount.

In decision 3, I would still choose the second option (f), where I have a 80% chance of losing $4000 and 25% chance of losing nothing. As much as the chances of losing nothing are low, there is an extremely slight difference between $4000 and $3000, which I could have lost anyway. On the same note, a $3000 loss is extremely high, in which case I should take every chance I have to prevent the loss. The additional $1000 is low when pitted against preventing the loss the entire amount.

1. I would not spend another $40 for a.............