lecture 18/19 assets 2 Flashcards
who made the og equation for good decisions
Daniel Bernoulli, expected value = odds of gain * value of gain
why does that equation not go well erry day
errors in odds, errors in value
example errors in odds
lottery, death by shark etc
example errors in value
supermarket ice cream, losing ticke tor losing money
MCA stand for
multi Criteria analysis
disads and advs of MCA
ADVANTAGE
fast and dirty approach
combine with others to becoem powerful
Disadvantages
weigthings hard to agree on
inconsistencies within weighting criteria
Risk based Decision making
risk=odds*consequence
AHP stand for
Analytical Hierarchy process
what is AHP and adv and disadv
pairwise comparison method
Advantages
creates ratio data
industrially accpeted
disadvantages
if dont understand its just a black box
labour intensive
AHP steps
1 define decision options
2structure elements into criteria, sub criteria
3 make pair wise comparison of each criteria
4 calculate weighting and consistency ratios
5 evaluate alternatives according to weighting
6 evaluate BcA benefit cost analysis
7 make decision
AHP disadvantages
get lazy when doing pairwise analysis
need more iterations for consistency
what is the Delphi method
experts answer quesitons in two or more rounds
after each round annonymous summary of eperts decisions as well as reasons for their judgement
next round experts revise their judgement
keep going until stop criteria
whats the idea of cognitive fluency
easy doe not mean true
ie clear text is not more true than unclear text.
sunk cost fallacy
-staying in bad movie because you paid for it, end up losing money and time instead of just money
what is self serving bias again
if i succeed it is because of me, if i fail its becaus eof someone else. operating in groups is more rational
