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Business 620 Critical Thinking Seve Salvatore ' s Chapter 14: a) Discussion Questions: 12 and 15. b) Problems: spreadsheet problems 1 and 2. Froeb et al.’ s Chapter 17: a) Individual problems: 17 – 1 and 17 – 4. Froeb et al.’ s Chapter 19: b) Individual problems: 19 – 5 and 19 – 6. Salvatore ' s Chapter 15: a) Discussion Questions: 7.
b) Problems: 8, 10, and spreadsheet problem 1.
Discussion Question 12: What is the rationale behind the minimax regret rule? What are some of the less formal and precise methods of dealing with uncertainty? When are these useful?
Discussion Question 15: How does the adverse selection problem arise in the credit-card market? How do credit-card companies reduce the adverse selection problem that they face? To what complaint does this give rise?
Spreadsheet Problem 1: An individual has to choose between investment A and investment B. The individual estimates that the income and probability of the income from each investment are as given in the following table.