Consider the Following Decision Scenario If You Are Uncertain Which State of Nature Will Occur

question 45

Short Answer

Consider the following decision scenario: $$\begin{array} { | l | l | l | l | l | } \hline { \text { Alternative } } & { \text { State of Nature } } & & \\\hline & \# 1 & \# 2 & \# 3 & \# 4 \\ \hline \text { A } & 1 & 0 & 1 & 6 \\\hline \text { B } & 1 & 5 & 4 & 2 \\\hline \text { C } & 3 & 2 & 2 & 3 \\\hline\end{array}$$ If you are uncertain which state of nature will occur, and use the maximax criterion, which alternative will you select?

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Definitions:

Unrealistically Optimistic

Describes a bias where individuals overestimate the likelihood of positive outcomes happening to them relative to others.

Humanistic Theories

A psychological perspective that emphasizes the study of the whole person and the inherent drive towards self-actualization.

Personality Formation

The development and consolidation of an individual's distinct character and behavioral traits over time, influenced by both genetic factors and environmental conditions.

Self-Actualization

The accomplishment of realizing one's skills and possibilities, regarded as a fundamental urge or demand in every human.