Define alternative that yields the highest expected value

Reference no: EM131772532

Qusetion: We learned in this chapter that one idea researchers have tested was that when forced to make a decision, people choose the alternative that yields the highest expected value.

a. If that were the case, explain which of the following two choices people would make:

Choice A: Accept a gift of $10.

Choice B: Take a gamble with probability 11000 of winning $9000 and 9991000 of winning nothing.

b. Explain how the situation in part a resembles the choices people have when they decide whether to buy lottery tickets.

Reference no: EM131772532

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