Risky Decision Making Involves Making a Tradeoff Between the Desirability

question 1

Multiple Choice

Risky decision making involves making a tradeoff between the desirability and the likelihood of an outcome. However, managers often focus mainly on desirability in some situations, and focus mainly on likelihood in others.This results in inconsistent preferences.Which heuristic is responsible for this bias?

• A)The representativeness heuristic
• B)The availability heuristic
• C)The simulation heuristic
• D)The anchoring-and-adjustment heuristic
• E)Correspondence bias

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Definitions:

Business Combination

A transaction or other event in which an acquirer gains control over one or more businesses, which can include mergers, acquisitions, consolidations, and more.

Transaction Costs

Expenses incurred when buying or selling goods, services, or financial assets, including fees, commissions, and other charges.

Issuing Shares

The process by which a company distributes new shares of stock to investors, thereby raising capital.

Reverse Takeover

A transaction where a private company acquires a public company to bypass the lengthy and complex process of going public.