Decision Making with Lottery Tickets
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Questions and Answers

According to the study by Wiggins and Ruefli, what percentage of companies achieved superior performance lasting 10 years?

  • 5% (correct)
  • 1%
  • 0.5%
  • 32%

    • Which of the following is a key insight from the Closed Experiment II?

  • A higher amount of potential winnings leads to a higher expected utility.
  • The difference between 61% and 63% chance of winning has a significant impact on decision-making. (correct)
  • A higher probability of winning leads to a higher expected utility.
  • The difference between 520,000 and 500,000 baht 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. (correct)
  • Small firms have a longer lifespan than large firms.
  • Large firms have a significantly longer lifespan than small firms.
  • The lifespan of small and large firms is approximately the same.

    • According to Prospect Theory, which of the following is a characteristic of human behavior under uncertainty?

    <p>Loss aversion</p> Signup and view all the answers

    What is the primary goal of a rational decision-maker in Game Theory?

    <p>To maximize expected utility</p> Signup and view all the answers

    In the context of Closed Experiment III, which lottery ticket would a risk-neutral individual prefer?

    <p>The 1st lottery ticket with a 0.99% chance to win 100,000 baht</p> Signup and view all the answers

    What is the main idea behind Framing Effects in decision-making?

    <p>The presentation of information influences the decision-making process.</p> Signup and view all the answers

    According to the study by Wiggins and Ruefli, what percentage of companies achieved repeating excellence?

    <p>1%</p> Signup and view all the answers

    What is the primary goal of a decision-maker in Utility Maximization?

    <p>To maximize expected utility</p> Signup and view all the answers

    Which of the following is a key concept in Prospect Theory?

    <p>Loss aversion</p> Signup and view all the answers

    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.

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    Description

    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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