Decision Making: Rational or Irrational

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The response addresses the queries posted in 1626 words with references.

//Before writing about the decision concepts involved in the different activities, we have to first know the concept of decision making. Then, we will focus on understanding the different scenarios given in the different activities. So, first of all, we will gain information about the decision making process under the heading of Introduction, for example: //

Introduction

Decision Making is a process of selecting an act judged to be the best according to some pre-determined criterion (Khandelwal, Gupta & Gupta, 2005). In the given unit, there are various scenarios and in each scenario, multiple decisions concepts are given. For each activity in unit two, there are multiple options and the decision making theory can be helpful in selecting the best suitable option among them. The review of the different scenarios is given as under.

//Above, we discussed about the concept of decision making. Now, we will identify and understand the 'decision concept' involved in the different situations of the activities, considered for study. The decision principle, theory and model will be defined for each situation in detail. Along with this, the reasons for defining the decision concept for a particular situation will also be focused upon. It will be helpful in comprehending the decision making criteria in different situations of the activities. For example: //

1

Activity 1

In the first case, there are two types of decision situations. One is deterministic decision or decision making under certainty, under which the decision maker has a guarantee to get a certain amount. On the other hand, second is decision under risk, in which amount of winning depends on the risk (Khandelwal, Gupta & Gupta, 2005). In this situation, the theory of "Decision Making under certainty" is applicable because all the information about the given decision problem is fully known.

The reason for the selection of this model is that it has a certainty of getting a fix sum of money. Most of the decision makers want to get secure money rather than getting more amounts with a certain degree of risk. Although the expected return is more in the second decision, yet it has an associated risk. Most of the decision makers avoid taking the benefits of the risk. Thus, it is clear that the selection of the first choice is appropriate in this situation.

In the second situation of activity one, most of the decision makers will select the second choice. This is because there is a very less difference in winning chances and ...