Pessimistic and risk-averse and risk-taking decision maker

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Reference no: EM131783240

A diligent MBA student faces a dilemma late in their last semester in the program. Two of their classes, a FINANCE class and a MANAGEMENT SCIENCE class have homework assignments due on the same day. There is not enough time to complete them both. The FINANCE faculty member has shown some previous tendencies for succumbing to pressure and has numerous times during the semester allowed extensions to homework due dates at the last minute. The MANAGEMENT SCIENCE faculty member will not grant an extension. The MBA student wishes to decide which homework to focus on. Key is their objective. Assume their choice is based upon trying to maximize their expected GPA for the semester. Some numerical estimations to help the MBA student decide: If the student chooses to complete the FINANCE homework (and thus, not the MANAGEMENT SCIENCE homework), there is an equal likelihood (probability) that the student will earn a 3.5 semester GPA or a 3.75 semester GPA. (**) If the student chooses to complete the MANAGEMENT SCIENCE homework, you can ask the FINANCE instructor for an extension. If she is in a good mood (which happens 80% of the time), she will give you extra time to complete your assignment. 75% of the time, with extra time, you will end up earning a 4.0 GPA. However, the other 25% of the time, due to a loss of goodwill, you will earn a 3.0 GPA. If she is not in a good mood (20% of the time), you will be denied the extension and earn a 3.4 GPA. If the student chooses to complete the MANAGEMENT SCIENCE homework, and you do not ask for an extension, there is still a 60% chance that the FINANCE instructor will allow an extension. If there is an extension given for the FINANCE homework, the student will have a 66.66% chance of earning a 3.7 GPA and a 33.33% chance of earning a 4.0 GPA. Without an extension, the assumption is that the student will earn a 3.4 GPA when all is said and done. Determine the optimal choice for the student based upon the expected GPA criterion. Would that decision be different if they were a pessimistic/risk-averse/risk-taking decision maker?

Reference no: EM131783240

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