A Rational Decision Maker Must Choose Between Two Alternatives

question 80

Multiple Choice

A rational decision maker must choose between two alternatives.Alternative 1 has a higher EMV than Alternative 2,but the decision maker chooses Alternative 2.What might explain why this occurs?

• A)Alternative 2 may have a higher expected utility.
• B)Alternative 1 may have a lower expected opportunity loss.
• C)The probabilities are not known.
• D)A rational decision maker could not possibly choose alternative 2.
• E)None of the above

---

Definitions:

Consistent Treatment

The practice of applying rules, policies, and decisions uniformly and fairly to all parties or situations without undue variation.

Foreign Investor

An individual, company, or entity that invests capital in another country outside of their home country, typically to gain financial returns.

Limited Liability Company

A corporate entity framework that marries the limited liability protections of a corporation with the tax flow-through benefits of partnerships and sole proprietorships.

Membership

The state of being a member or part of a group, organization, or society, often with specific rights and responsibilities.