Is Expected Utility a good theory for explaining how people make Essay

Is Expected Utility a good theory for explaining how people make choices - Essay Example Therefore, it is virtually impossible to distinguish the most important factors from the least important ones. More often than not, economic theorists and scholars in statistics and probability choose to describe one single element of human decision-making and fail to account for a variety of subjective influences and objective circumstances that change the decision-making reality. Theory of Expected Utility is fairly regarded as one of the most challenging, controversial, and sophisticated theories of making choices. Theory of Expected Utility provides a brief insight into how individuals weigh and choose the anticipated utilities of different actions and decisions. Unfortunately, Theory of Expected Utility is too narrow to explain how people make choices: the theory exhibits unbelievable insensitivity to emotional and probabilistic factors and does not account for the natural human striving to preserve emotional and rational status quo by all possible means. Theory of Expected Util ity (or Expected Utility Theory – EUT) is rightly considered as one of the most complex and controversial explanations to how people make choices.... Apparently, EUT relies on the intrinsic striving by humans to be rational and objective in their choices and decisions. It should be noted, that the roots and origins of EUT date back to the middle of the 18th century, when the first solutions to the St. Petersburg paradox were developed (Cohen 1994). Daniel Bernoulli was the first to propose an idea that any expectation and decision-making that follows would be integrally linked to the notion of personal worth or personal utility, which individuals attributed to each particular option (Cohen 1994). Moreover, it was due to Bernoulli that the process of making choices was presented in numerical terms (Cohen 1994). With time, making choices came to exemplify a complex set of rational steps and acts, which laid the ground for making one specified preference over other stated options (Cohen 1994). As a result, EUT was developed to reflect a theoretical belief that any option could be assigned a numerical value, generally described as â⠂¬Å"utility†, with the process of making choices directed toward the option with the highest expected utility (Cohen 1994). Despite its theoretical contribution, EUT is too narrow to reflect, discuss, and predict how people make choices. The growing body of scholarly criticism does not leave any room for EUT. The fact is in that individuals are being governed by a variety of non-rational, emotional, subjective meanings that are beyond the scope of EUT. EUT does not account for the fact that individuals tend to make emotional choices and are willing to preserve their status quo by all possible means. Therefore, EUT can hardly be a relevant means of explaining how people make choices. Rather, it presents only one, narrow dimension of the complex process of taking the

Any bisiness artical that has been new nd happened for the last few Essay

Any bisiness artical that has been new nd happened for the last few months - Essay Example All factors of production in the business, may it be, labor, capital, raw materials or enterprise works towards achieving a common goal that is set for the company, and all activities carried out within the business are supposed to lead the company towards achieving its ultimate goal (Nolan, pp.148-152). Businesses additionally are run in a systematic manner, involve various processes, and have a number of rules and regulations that must be followed by those involved in it. One can observe additionally a number of departments in every business that manages various activities, such as the marketing department, finance department, promotion and advertising department, customer care department, etc (Nolan, pp. 20-39). A number of external and internal factors, which may include inflation rates, interest rates, and the exchange rate of a country’s currency can also influence every business and various skills are required in order to run a business smoothly and successfully along w ith achieving its objectives. Recently, due to the earthquake in Japan, which was followed by a tsunami, many changes have occurred in a number of businesses in the country. In an article by Alex Taylor (2011), found on the CNN website, the author (Taylor, 2011) talks about how Japan’s auto making industry is down but not out. He states that the two natural disasters that recently occurred will surely cause various shortages in the industry, but as noted before, Japanese automakers have the power to find their way out of catastrophes successfully. The author (Taylor, 2011) further states in his article that a Toyota representative had reported that no deaths or injuries have been under notice in the Toyota parts plants and subsidiaries, but the plants have surely suffered damage. According to Alex (Taylor, 2011), Toyota plans to keep its 12 main assembly plants in the country closed until Tuesday and the company’s representative stated that this might cause Toyota to l ose 95,000 units of cars that could have been under production. Due to this, Toyota reduced acceleration of the process of production in North America in order to conserve parts (Gholz, pp. 26-30). Japan’s auto making industry (Shimokawa, pp. 56-64) is currently trying to recover and resist from coming to an end, while people in the country are busy burying the dead, rescuing and curing the living citizens and dealing with the aftermath of the great disaster. Korea’s Tong Yang Securities states that production in the industry will surely not be able to come back to normal very soon, even though security analysts are quite busy doing their job and evaluating the results of the major catastrophe. Statistics (Taylor, 2011) included in the report show that in six months after the earthquake that occurred in January 1995, â€Å"shares of Toyota, Honda, and Nissan dropped by 22%, 35%, and 40% respectively† (Taylor, 2011), and it took the companies around one month abo ve a year to recover from the massive destruction and loss caused by the earthquake. At that time, Honda and Mazda, both halted the production of their vehicles and parts for the rest of the week after the disaster, and there was a loss of production of about 36,700 vehicles a day (Taylor, 2011) globally. The author of the article (Taylor, 2011) fu