Exhibit 14.1 The Following Questions Are Based on the Information Below

question 67

Multiple Choice

Exhibit 14.1
The following questions are based on the information below.
An investor is considering 4 investments, A, B, C and leaving his money in the bank. The payoff from each investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following payoff matrix has been developed for the decision problem.
-Refer to Exhibit 14.1. What decision should be made according to the maximax decision rule?

• A) A
• B) B
• C) C
• D) Bank

---

Definitions:

Negative Reinforcement

A behavioral principle where the removal of an undesirable or aversive stimulus following a behavior increases the likelihood of that behavior being repeated.

Intermittent Reinforcement

A conditioning schedule where a response is reinforced only some of the time, known to create strong and persistent behaviors.

Behavior Modification

A technique used in psychology to change undesirable behaviors through the systematic application of reinforcement or punishment.

Positive Reinforcement

A method in behavioral psychology where a desirable stimulus is introduced after a behavior, increasing the likelihood of that behavior being repeated.