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Decision concepts: theory, principle, model

Note...there are multiple scenarios within the Unit 2 activity. Your goal is to try to identify the most applicable decision concept (from our learning in Unit 2) for each scenario, support your conclusions, and then provide a summary analysis about what you've learned.

There are three (3) parts to this project. Your research paper should address each one fully and thoroughly.

Part 1: Review each situation (there are multiple scenarios within the activity) and identify which decision concept (theory, principle, model, etc.) from our learning in Unit 2 you believe to be present. Make sure you also explain (for each concept identified) "how" and "why" you arrived at your conclusion. In other words; what information helped you select each concept for each situation?

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?

Make sure you reinforce your work with suitable references from the text book and other authoritative and credible references, which must enhance the quality of your response.

***SEE ATTACHED DOCUMENT FOR UNIT 2 ACTIVITY***

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The response addresses the queries posted in 1152 words with references.

//For making effective research, we have to first understand and analyze the different situations and the multiple scenarios with each of the activities. The activity 1 has tow situations, we will discuss about the 'decision concept' applicable in the two situations, on the basis of our previous learning. We will also discuss the reasons, which assisted us in identifying the decision concept involved in the situation: //

Activity 1

Situation 1 - Most of the people are choosing alternative first, because they are receiving guaranteed amount i.e. $1,000,000. But the expected return is greater in second alternative. In this, people are influenced by the certainty effect on their income because they are concentrating on sure income rather than the higher probable income. This effect is applying because people mostly prefer those alternatives, which help to eliminate the risk rather than reducing it.

Situation 2 - Each person wants to maximize his income, so people are choosing the second alternative, which gives 10% chance of getting $2,500,000. Whereas in 1st alternative people have 11% chance of getting $1,000,000. This decision applies the Regret theory of maximizing the profit, because decisions are made under uncertainty and people want to maximize their income under uncertainty (Khandelwal, Gupta & Gupta, 2005). This theory is working in this decision because people prefer those alternatives, which give high income to them.

//After analyzing the Activity 1 and understanding the decision concept applicable in the activity 1, we will identify and understand the decision concept applicable in activity 2. The activity 2 is based on the situation of purchasing probabilistic insurance and non-response of the students. The reasons for defining the decision concept in ...

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The response addresses the queries posted in 772 Words, APA References.

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