Fix It Clay Is a Graduate Student Who Recently Celebrated Completing His

question 21

Essay

Fix It
Clay is a graduate student who recently celebrated completing his first year of graduate school. The next day Clay felt terrible. This leads him to wonder what the best hangover remedy is. He begins by asking a few of his friends what has worked for them. One friend says a heavy, greasy meal always makes him feel better. Another friend says she takes ibuprofen and pink bismuth. His roommate swears by lots of coffee. Clay decides to test these remedies empirically and his friends eagerly volunteer to participate in his study. Clay's friends consume drinks of their choosing until their blood alcohol content reaches 1.6, twice the legal limit of intoxication. The next day, he serves each of them bacon, eggs, hash browns, and pancakes. Two hours after they eat they complete a survey to assess how sick they feel. Sickness scores vary from 0 = not sick at all, to 50 = extremely sick. Clay repeats this procedure two more times with the same participants. On the second occasion he gives them ibuprofen and pink bismuth, and on the third occasion he serves them coffee.
Clay's research is not based on a review of the literature. What do you think about that? What type of research design did Clay create and how should he analyze the data? Do you see any limitations with his methods?

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, used in evaluating investment opportunities.

Internal Rate of Return

A financial metric used to evaluate the profitability of an investment, representing the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equal zero.

Required Rate of Return

The minimum annual percentage return a investor expects to achieve from an investment, considering the risk involved.

Simple Rate of Return

A method of evaluating the financial performance of an investment by dividing annual incremental operating income by initial investment.