Heading: Analyzing Risky Decisions

question 29

Multiple Choice

Heading: Analyzing Risky Decisions
**Reference: Use the decision tree along with the given probabilities to answer the next six questions
Probability Event A = 30% Probability Event B = 70%
Probability Event 1 = 58% Probability Event 2 = 42%
Probability of Event A given that Event 1 occurs = 16%
Probability of Event B given that Event 1 occurs = 84%
Probability of Event A given that Event 2 occurs = 50%
Probability of Event B given that Event 2 occurs = 50%

-*If the cost of obtaining information to determine Event 1 and Event 2 is $5, what is the value of perfect information?

• A)-1.96
• B)0
• C)3.04

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Definitions:

Rewards

Benefits, recognition, or compensation provided to individuals to recognize their efforts, achievements, or behaviors.

Vroom-Jago

A leadership model that focuses on decision-making processes and emphasizes the situational factors affecting the choice of leadership behaviors.

Leader-Participation Theory

is a leadership model that suggests the effectiveness of a decision-making process is enhanced when leaders involve subordinates in the decision-making process.

Authority-Oriented Decision Methods

Decision-making approaches that rely on a centralized figure or group in charge to make decisions for the organization.