10 Questions
According to the study by Wiggins and Ruefli, what percentage of companies achieved superior performance lasting 10 years?
5%
Which of the following is a key insight from the Closed Experiment II?
The difference between 61% and 63% chance of winning has a significant impact on decision-making.
What is the main implication of the study on the lifespan of small and large firms?
Small firms have a shorter lifespan than large firms, but the difference narrows after a few years.
According to Prospect Theory, which of the following is a characteristic of human behavior under uncertainty?
Loss aversion
What is the primary goal of a rational decision-maker in Game Theory?
To maximize expected utility
In the context of Closed Experiment III, which lottery ticket would a risk-neutral individual prefer?
The 1st lottery ticket with a 0.99% chance to win 100,000 baht
What is the main idea behind Framing Effects in decision-making?
The presentation of information influences the decision-making process.
According to the study by Wiggins and Ruefli, what percentage of companies achieved repeating excellence?
1%
What is the primary goal of a decision-maker in Utility Maximization?
To maximize expected utility
Which of the following is a key concept in Prospect Theory?
Loss aversion
Study Notes
Decision-Making and Rational Behaviour
- The Ultimatum Game involves a proposer and a responder, where the proposer divides 1,000 baht and the responder accepts or rejects the proposal.
- If the responder accepts, both parties receive the proposed amount; if rejected, both receive nothing.
Consumers' Rational Behaviour
- The concept of indifference curve or maximizing utility is used to analyze consumers' rational behaviour.
- Three axioms characterize rational behaviour: completeness, transitivity, and reflexivity.
Economic Models
- The economic model of human rationality includes dynamic, stochastic, and general equilibrium models.
Business Management
- Only 5% of companies achieve superior performance lasting 10 years, and less than 0.5% achieve it for 20 years.
- The average lifespan of small firms is shorter than large ones, but the difference in survival rates narrows significantly after the first few years of existence.
- It is very hard to build a successful long-term business, and competitors can try different strategies.
Decision-Making under Uncertainty
- In a lottery ticket scenario, individuals are indifferent between two tickets with different probabilities of winning the second prize or the last-two-number prize.
- The same scenario is repeated with different probability values to test decision-making under uncertainty.
Lotteries and Decision-Making
- Two lottery tickets are offered with different probabilities of winning: 61% chance to win 520,000 baht or 63% chance to win 500,000 baht, and 98% chance to win 520,000 baht or 100% chance to win 500,000 baht.
- The decisions made in these scenarios are used to analyze decision-making under uncertainty.
This quiz assesses decision-making skills in the context of lottery tickets with different prizes. It explores indifference between tickets and willingness to sell them at a certain price.
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