When Decision Makers Construct Simplified Models That Extract the Essential

question 3

Multiple Choice

When decision makers construct simplified models that extract the essential features from a problem without capturing all the complexities of a problem, they are acting under which of the following?

• A)heuristics
• B)unbounded rationality
• C)uncertainty
• D)bounded rationality

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Definitions:

Effect

The result or outcome of a particular cause or action.

Fraudulent Misrepresentation

The act of deliberately misleading or deceiving another party with false statements or information, leading to their detriment on reliance of such misrepresentation.

Economic Duress

A situation where one party is forced into a contract or agreement under threats, making the consent given not truly voluntary.

Net Average Annual Profit

The average profit of a business over a specified period, after all expenses, taxes, and costs have been deducted.