Critical Thinking Seven
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.