Question

1.

Improper use of heuristics may cause errors in the thought process.

		True
		False

2.Likelihood is the updated belief about the distinction of interest after the results of an experiment are known.

		True
		False

3.

An information gathering activity is material to a decision if at least one of its indications will change the alternative we choose in the given situation.

		True
		False

4.Liam is a risk-averse person. Based on his current state of information, he values Deal A at $100. If he purchases free clairvoyance, the value of the deal goes up to $110.

What can we infer about Liam?

		His utility curve is a straight line
		We are never able to calculate the value of clairvoyance because he is risk-averse
		The most he is willing to pay for imperfect information is less than $10
		None of the Above

Answer 1

1.True

( If used improperly, Heuristics can lead to inaccurate judgements about how common things occur and representative characteristics being misinterpreted . Infact, it's one of the sources of thinking trap.)

2 True

( Probabilities or likelihoods are often interpreted as degrees of beliefs.)

3. True

( Information gathering activity should provide value for one attribute of one alternative that can be used to reduce uncertainty.)

4) The most he is willing to pay for imperfect information is 10 $

( Eventhough Liam is Risk averse, he purchases clairvoyance which increases his dealvalue by 10 which is the additional amount he will be ready to pay for imperfect information.)