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People often do not make decisions by using the basic

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People often do not make decisions by using the basic [#permalink]

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New post 26 Jan 2008, 09:46
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People often do not make decisions by using the basic economic principle of rationally weighing all possibilities and then making the choice that can be expected to maximize benefits and minimize harm. Routinely, people process information in ways that are irrational in this sense.

Any of the following, if true, would provide evidence in support of the assertions above EXCEPT.

A) People tend to act on new information, independent of its perceived relative merit, rather than on information they already have.

B) People prefer a major risk taken voluntarily to a minor one that has been forced on them, even if they know that the voluntarily taken risk is statistically more dangerous.

C) People tend to take up potentially damaging habits even though they have clear evidence that their own peers as well as experts disapprove of such behavior.

D) People avoid situations in which they could become involved in accidents involving large numbers of people more than they do situation where single-victim accidents are possible, even though they realize that an accidents are possible, even though they realize that an accident is more likely in the latter situations than in the former.

E) People usually give more weight to a physician’ opinion about the best treatment for a disease than they do to the opinion of a neighbor if they realize that the neighbor is not an expert in disease treatment.

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Re: CR - Basic economic principle of rationale [#permalink]

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New post 26 Jan 2008, 09:52
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okay so we are trying to find out a logical action (the one that reduces harm and maximises returns based on all information at hand). 4 out of 5 below will be illogical.

GHIBI wrote:
People often do not make decisions by using the basic economic principle of rationally weighing all possibilities and then making the choice that can be expected to maximize benefits and minimize harm. Routinely, people process information in ways that are irrational in this sense.

Any of the following, if true, would provide evidence in support of the assertions above EXCEPT.

A) People tend to act on new information, independent of its perceived relative merit, rather than on information they already have. illogical, they know less about new information yet they act on it. This is risky.

B) People prefer a major risk taken voluntarily to a minor one that has been forced on them, even if they know that the voluntarily taken risk is statistically more dangerous. prefer major risk = eliminate

C) People tend to take up potentially damaging habits even though they have clear evidence that their own peers as well as experts disapprove of such behavior. again, illogical to take up damaging habits if consequences are known

D) People avoid situations in which they could become involved in accidents involving large numbers of people more than they do situation where single-victim accidents are possible, even though they realize that an accidents are possible, even though they realize that an accident is more likely in the latter situations than in the former. they know that the accident is likely to happen i nthe latter, still they go for it..eliminate

E) People usually give more weight to a physician’ opinion about the best treatment for a disease than they do to the opinion of a neighbor if they realize that the neighbor is not an expert in disease treatmentthey listen to a doctor over a non doctor neighbour. good logical choice...lets stick with this shall we.




E

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Re: CR - Basic economic principle of rationale [#permalink]

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New post 26 Jan 2008, 21:35
Conclusion: People process information in an irrational sense.

A) People tend to act on new information, independent of its perceived relative merit, rather than on information they already have. [Strengthens the conclusion – Eliminate it]

B) People prefer a major risk taken voluntarily to a minor one that has been forced on them, even if they know that the voluntarily taken risk is statistically more dangerous. [Strengthens the conclusion – Eliminate it]

C) People tend to take up potentially damaging habits even though they have clear evidence that their own peers as well as experts disapprove of such behavior. [Strengthens the conclusion – Eliminate it]

D) People avoid situations in which they could become involved in accidents involving large numbers of people more than they do situation where single-victim accidents are possible, even though they realize that an accidents are possible, even though they realize that an accident is more likely in the latter situations than in the former. [Strengthens the conclusion – Eliminate it]

E) People usually give more weight to a physician’ opinion about the best treatment for a disease than they do to the opinion of a neighbor if they realize that the neighbor is not an expert in disease treatment.[Weakens the conclusion – Hold it]

Answer: E

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Re: CR - Basic economic principle of rationale [#permalink]

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New post 27 Jan 2008, 04:18
clear E

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Re: CR - Basic economic principle of rationale   [#permalink] 27 Jan 2008, 04:18
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