Risk and Rational Decision Process

1. Is a rational decision process likely to produce the best outcomes when a situation is risky or uncertain? Is an intuitive, behavioral process best used under risk or under certainty? Explain. 1. During the rational decision process, I feel that an uncertain situation is better. The decision maker may not know all the alternatives, the risks associated with each, or the consequences of each alternative, however I feel that sometimes when you don’t know all the facts of something that you work harder to try and come up with the best solutions. Not having the answers can allow the decision making process to go many ways. Of course it will probably be harder for everyone to agree on things, seeing as they don’t have and certain answers, but that is where the rational decision process comes into play. They have to define the decision situation and identify all the alternatives possible. The intuitive behavioral process is best used under risk. I think it is the best because with risk the decision maker is able to use their own intuition in the situation. Risk centers on whether the union representatives are bluffing. It is the decision maker’s job to figure everything out.

Sometime you make feel that another decision is better than someone else’s Of course this makes it harder to agree on things, but sometimes following your gut works out for the best! 2. Consider the hypothetical case in which a company must choose one of the two promising new products to develop and introduce to the market. There are not sufficient funds for both products. How might the company make use of intuition in making this decision? 2. Because the company cannot afford to develop both of the products. First the company needs to take a closer look at each of the product’s , they then need to decide which one they think people will like more, and which one that they feel will sell better on the market. The one that will make it farther is the one that will serve the best interest of the company. While making these decisions the people making the decisions will be able to use their intuition. I think that everyone wants to follow their own instincts, even if it may not be the best decision.

This is why most companies have groups of people that all had to make the decision together. Like I said in question 1, sometimes one person’s intuition is different from the people that they are working with. Of course when using intuition sometimes a person’s rationality and, logic are missing. Using intuition now might seem like a good idea, but sometimes in the long run it can end up in disaster. 3. Reconsider the case presented in question 2. How might the company make use of EMB in making its decision? 3. The company could use EMB by using “Fact based evidence” to gather all the evidence or facts to help them choose the right product. Instead of using intuition they would use solid facts and evidence that they gathered form learning and experience. They can use their experience to help guide them in the right direction. Choosing the right product should be based off of experience and knowledge. They should look at all of the risks, and draw backs of each product when making the final decision. The company needs to choose the product that will help the company in the long run, and do well in the market. The use to EMB instead of intuition may help then more because they aren’t following there gut instincts, they are making the decision based of cold hard facts.